EX-99.1 2 sfm-20240630xex991.htm EX-99.1 Document

Exhibit 99.1
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Investor Contact: Media Contact:
Susannah Livingston media@sprouts.com
(602) 682-1584
susannahlivingston@sprouts.com
Sprouts Farmers Market, Inc. Reports Second Quarter 2024 Results
PHOENIX, Ariz. – (Business Wire) – July 29, 2024 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week second quarter ended June 30, 2024.
"Sprouts saw outstanding second quarter results, thanks to exceptional teamwork and strategic focus,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. “Customers are responding to our healthy product assortment and our unique in-store experience. We are excited about the opportunities ahead."
Second Quarter Highlights:
•Net sales totaled $1.9 billion; a 12% increase from the same period in 2023
•Comparable store sales growth of 6.7%
•Diluted earnings per share of $0.94; compared to diluted earnings per share of $0.65 and Adjusted diluted earnings per share of $0.71(1) in the same period in 2023
•Opened 5 new stores, resulting in 419 stores in 23 states as of June 30, 2024
(1)Adjusted diluted earnings per share, a non-GAAP financial measure, excludes the impact of certain special items. For the second quarter ended June 30, 2024, there were no adjustments due to special items. See the “Non-GAAP Financial Measures” section of this release for additional information about this item.
Leverage and Liquidity in Second Quarter 2024
•Ended the quarter with $177 million in cash and cash equivalents and zero balance on its $700 million revolving credit facility after a $125 million voluntary pay down
•Authorized a new $600 million share buyback program and repurchased 640 thousand shares of common stock for a total investment of $44 million, excluding excise tax
•Generated cash from operations of $311 million and invested $89 million in capital expenditures, net of landlord reimbursement, year-to-date thru June 30, 2024
Third Quarter and Full-Year 2024 Outlook
The following provides information on our third quarter 2024 outlook:
•Comparable store sales growth: 3.5% to 4.5%
•Adjusted diluted earnings per share: $0.71 to $0.75
The following provides information on our full-year 2024 outlook:
•Net sales growth: 9% to 10%
•Comparable store sales growth: 4% to 5%
•Adjusted EBIT: $445 million to $455 million
•Adjusted diluted earnings per share: $3.29 to $3.37


•Unit growth: Approximately 35 new stores
•Capital expenditures (net of landlord reimbursements): $225 million to $245 million
Second Quarter 2024 Conference Call
Sprouts will hold a conference call at 5:00 p.m. Eastern Time on Monday, July 29, 2024, during which Sprouts executives will further discuss second quarter 2024 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 Time on July 29, 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 415 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
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Thirteen weeks endedTwenty-six weeks ended
June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Net sales$1,893,519 $1,692,247 $3,777,327 $3,425,557 
Cost of sales1,175,154 1,066,275 2,336,649 2,149,523 
Gross profit718,365 625,972 1,440,678 1,276,034 
Selling, general and administrative expenses556,367 497,965 1,096,138 984,160 
Depreciation and amortization (exclusive of depreciation included in cost of sales)31,489 33,964 63,721 68,032 
Store closure and other costs, net3,192 2,427 5,236 30,704 
Income from operations127,317 91,616 275,583 193,138 
Interest (income) expense, net(139)2,140 679 4,360 
Income before income taxes127,456 89,476 274,904 188,778 
Income tax provision32,167 22,142 65,515 45,284 
Net income$95,289 $67,334 $209,389 $143,494 
Net income per share:
Basic$0.95 $0.65 $2.08 $1.39 
Diluted$0.94 $0.65 $2.06 $1.38 
Weighted average shares outstanding:
Basic100,460102,824100,765103,326
Diluted101,196103,514101,647104,240


SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
June 30, 2024December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$177,321 $201,794 
Accounts receivable, net31,381 30,313 
Inventories325,578 323,198 
Prepaid expenses and other current assets33,771 48,467 
Total current assets568,051 603,772 
Property and equipment, net of accumulated depreciation836,010 798,707 
Operating lease assets, net1,402,161 1,322,854 
Intangible assets208,060 208,060 
Goodwill381,750 381,741 
Other assets14,487 12,294 
Total assets$3,410,519 $3,327,428 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$158,773 $179,927 
Accrued liabilities193,814 164,887 
Accrued salaries and benefits69,656 74,752 
Current portion of operating lease liabilities126,395 126,271 
Current portion of finance lease liabilities1,119 1,032 
Total current liabilities549,757 546,869 
Long-term operating lease liabilities1,482,797 1,399,676 
Long-term debt and finance lease liabilities8,057 133,685 
Other long-term liabilities38,661 36,270 
Deferred income tax liability61,972 62,381 
Total liabilities2,141,244 2,178,881 
Commitments and contingencies
Stockholders’ equity:
Undesignated preferred stock; $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding— — 
Common stock, $0.001 par value; 200,000,000 shares authorized, 100,214,345 shares issued and outstanding, June 30, 2024; 101,211,984 shares issued and outstanding, December 31, 2023100 101 
Additional paid-in capital791,364 774,834 
Retained earnings477,811 373,612 
Total stockholders’ equity1,269,275 1,148,547 
Total liabilities and stockholders’ equity$3,410,519 $3,327,428 


SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Twenty-six weeks ended
June 30, 2024July 2, 2023
Operating activities
Net income$209,389 $143,494 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense67,756 70,013 
Operating lease asset amortization65,489 62,331 
Impairment of assets— 27,845 
Share-based compensation13,266 9,461 
Deferred income taxes(396)(5,953)
Other non-cash items2,189 254 
Changes in operating assets and liabilities, net of effects from acquisition:
Accounts receivable18,746 8,390 
Inventories(2,380)(7,665)
Prepaid expenses and other current assets13,947 9,915 
Other assets(125)3,205 
Accounts payable(12,914)3,374 
Accrued liabilities24,081 41,733 
Accrued salaries and benefits(5,095)(2,561)
Operating lease liabilities(83,952)(68,986)
Other long-term liabilities1,294 (69)
Cash flows from operating activities311,295 294,781 
Investing activities
Purchases of property and equipment(108,925)(98,683)
Payments for acquisition, net of cash acquired— (13,042)
Cash flows used in investing activities(108,925)(111,725)
Financing activities
Payments on revolving credit facilities(125,000)(75,000)
Payments on finance lease liabilities(542)(482)
Repurchase of common stock(104,488)(148,346)
Proceeds from exercise of stock options3,265 7,238 
Cash flows used in financing activities(226,765)(216,590)
Decrease in cash, cash equivalents, and restricted cash(24,395)(33,534)
Cash, cash equivalents, and restricted cash at beginning of the period203,870 295,192 
Cash, cash equivalents, and restricted cash at the end of the period$179,475 $261,658 


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 reported these adjusted measures to provide additional information with respect to the impact of store closure costs and certain other items during the thirteen and twenty-six weeks ended July 2, 2023. There were no such material adjustments during the thirteen and twenty-six weeks ended June 30, 2024.
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 twenty-six weeks ended June 30, 2024 and July 2, 2023:



SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
NON-GAAP MEASURE RECONCILIATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Thirteen weeks endedTwenty-six weeks ended
June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Gross profit$718,365 $625,972 $1,440,678 $1,276,034 
Special items (1)
— 1,653 — 1,653 
Adjusted gross profit$718,365 $627,625 $1,440,678 $1,277,687 
Gross margin37.9 %37.0 %38.1 %37.3 %
Adjusted gross margin37.9 %37.1 %38.1 %37.3 %
Net income$95,289 $67,334 $209,389 $143,494 
Income tax provision32,167 22,142 65,515 45,284 
Interest (income) expense, net(139)2,140 679 4,360 
Earnings before interest and taxes (EBIT)127,317 91,616 275,583 193,138 
Special items (2)
— 8,115 — 43,642 
Adjusted EBIT127,317 99,731 275,583 236,780 
Depreciation, amortization and accretion, adjusted for special items33,234 33,221 67,756 64,134 
Adjusted EBITDA$160,551 $132,952 $343,339 $300,914 
Net income$95,289 $67,334 $209,389 $143,494 
Special items, net of tax (2)
— 5,971 — 32,492 
Adjusted net income$95,289 $73,305 $209,389 $175,986 
Diluted earnings per share$0.94 $0.65 $2.06 $1.38 
Adjusted diluted earnings per share$0.94 $0.71 $2.06 $1.69 
Diluted weighted average shares outstanding101,196103,514101,647104,240
(1)For the thirteen and twenty-six weeks ended June 30, 2024, there were no special items. For the thirteen and twenty-six weeks ended July 2, 2023, special items included approximately $2 million in Cost of sales related to store closures and our supply chain transition.
(2)For the thirteen and twenty-six weeks ended June 30, 2024, there were no special items. For the thirteen weeks ended July 2, 2023, special items included approximately $4 million in Selling, general and administrative expenses related to store closures, our supply chain transition and acquisition related costs, $2 million in Depreciation and amortization (exclusive of depreciation in cost of sales) for accelerated depreciation in connection with store closures and $2 million in Cost of sales related to store closures and our supply chain transition. For the twenty-six weeks ended July 2, 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, $8 million in Selling, general and administrative expenses related to store closures, our supply chain transition and acquisition related costs, and $2 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.


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Source: Sprouts Farmers Market, Inc
Phoenix, AZ
7/29/24