EX-99.1 2 sfm-20240929xex991.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 Third Quarter 2024 Results
PHOENIX, Ariz. – (Business Wire) – October 30, 2024 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week third quarter ended September 29, 2024.
"The third quarter was another exceptional performance by our Sprouts team," said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "We are driving robust traffic growth and continue to execute at a very high level. We remain confident in our long-term growth potential."
Third Quarter Highlights:
•Net sales totaled $1.9 billion; a 14% increase from the same period in 2023
•Comparable store sales growth of 8.4%
•Diluted earnings per share of $0.91; compared to diluted earnings per share of $0.64 and Adjusted diluted earnings per share of $0.65(1) in the same period in 2023
•Opened 9 new stores, resulting in 428 stores in 23 states as of September 29, 2024
(1)Adjusted diluted earnings per share, a non-GAAP financial measure, excludes the impact of certain special items. For the third quarter ended September 29, 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 Third Quarter 2024
•Ended the quarter with $310 million in cash and cash equivalents and zero balance on its $700 million revolving credit facility
•Repurchased 264 thousand shares of common stock for a total investment of $25 million, excluding excise tax
•Generated cash from operations of $520 million and invested $132 million in capital expenditures, net of landlord reimbursement, year-to-date thru September 29, 2024
Fourth Quarter and Full-Year 2024 Outlook
The following provides information on our fourth quarter 2024 outlook:
•Comparable store sales growth: 8.0% to 10.0%
•Adjusted diluted earnings per share: $0.67 to $0.71
The following provides information on our full-year 2024 outlook:
•Net sales growth: approximately 12.0%
•Comparable store sales growth: approximately 7.0%
•Adjusted EBIT: $490 million to $495 million
•Adjusted diluted earnings per share: $3.64 to $3.68


•Unit growth: 33 new stores; the openings of two Florida stores affected by Hurricane Milton are expected to be postponed to the first quarter of 2025
•Capital expenditures (net of landlord reimbursements): $205 million to $215 million
Third Quarter 2024 Conference Call
Sprouts will hold a conference call at 5:00 p.m. Eastern Time on Wednesday, October 30, 2024, during which Sprouts executives will further discuss third 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 October 30, 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 33,000 team members and operates more than 420 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 endedThirty-nine weeks ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Net sales$1,945,735 $1,713,282 $5,723,062 $5,138,839 
Cost of sales1,204,812 1,087,848 3,541,461 3,237,371 
Gross profit740,923 625,434 2,181,601 1,901,468 
Selling, general and administrative expenses580,332 502,801 1,676,470 1,486,961 
Depreciation and amortization (exclusive of depreciation included in cost of sales)34,408 31,802 98,129 99,834 
Store closure and other costs, net3,732 3,176 8,968 33,880 
Income from operations122,451 87,655 398,034 280,793 
Interest (income) expense, net(1,061)1,698 (382)6,058 
Income before income taxes123,512 85,957 398,416 274,735 
Income tax provision31,902 20,644 97,417 65,928 
Net income$91,610 $65,313 $300,999 $208,807 
Net income per share:
Basic$0.91 $0.64 $2.99 $2.03 
Diluted$0.91 $0.64 $2.97 $2.01 
Weighted average shares outstanding:
Basic100,148101,881100,560102,844
Diluted101,025102,703101,469103,758


SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
September 29, 2024December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$309,668 $201,794 
Accounts receivable, net25,073 30,313 
Inventories329,472 323,198 
Prepaid expenses and other current assets29,384 48,467 
Total current assets693,597 603,772 
Property and equipment, net of accumulated depreciation851,443 798,707 
Operating lease assets, net1,437,280 1,322,854 
Intangible assets208,060 208,060 
Goodwill381,750 381,741 
Other assets13,407 12,294 
Total assets$3,585,537 $3,327,428 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$198,246 $179,927 
Accrued liabilities206,153 164,887 
Accrued salaries and benefits81,528 74,752 
Accrued income tax1,392 — 
Current portion of operating lease liabilities127,558 126,271 
Current portion of finance lease liabilities1,147 1,032 
Total current liabilities616,024 546,869 
Long-term operating lease liabilities1,517,192 1,399,676 
Long-term debt and finance lease liabilities7,731 133,685 
Other long-term liabilities37,560 36,270 
Deferred income tax liability63,538 62,381 
Total liabilities2,242,045 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, 100,039,217 shares issued and outstanding, September 29, 2024; 101,211,984 shares issued and outstanding, December 31, 2023
100 101 
Additional paid-in capital799,487 774,834 
Retained earnings543,905 373,612 
Total stockholders’ equity1,343,492 1,148,547 
Total liabilities and stockholders’ equity$3,585,537 $3,327,428 


SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Thirty-nine weeks ended
September 29, 2024October 1, 2023
Operating activities
Net income$300,999 $208,807 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense103,881 103,668 
Operating lease asset amortization99,278 94,403 
Impairment of assets— 27,845 
Share-based compensation19,925 14,731 
Deferred income taxes1,170 (13,225)
Other non-cash items3,116 596 
Changes in operating assets and liabilities, net of effects from acquisition:
Accounts receivable30,273 10,070 
Inventories(6,275)(11,322)
Prepaid expenses and other current assets18,595 21,093 
Other assets219 3,870 
Accounts payable25,556 27,446 
Accrued liabilities37,877 19,027 
Accrued salaries and benefits6,777 4,509 
Accrued income tax1,392 — 
Operating lease liabilities(122,646)(103,787)
Other long-term liabilities214 1,294 
Cash flows from operating activities520,351 409,025 
Investing activities
Purchases of property and equipment(161,687)(165,016)
Payments for acquisition, net of cash acquired— (13,032)
Cash flows used in investing activities(161,687)(178,048)
Financing activities
Payments on revolving credit facilities(125,000)(100,000)
Payments on finance lease liabilities(840)(749)
Repurchase of common stock(129,698)(180,415)
Proceeds from exercise of stock options4,729 8,844 
Cash flows used in financing activities(250,809)(272,320)
Increase/(decrease) in cash, cash equivalents, and restricted cash107,855 (41,343)
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$311,725 $253,849 


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 thirty-nine weeks ended October 1, 2023. There were no such material adjustments during the thirteen and thirty-nine weeks ended September 29, 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 thirty-nine weeks ended September 29, 2024 and October 1, 2023:



SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
NON-GAAP MEASURE RECONCILIATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Thirteen weeks endedThirty-nine weeks ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Gross profit$740,923 $625,434 $2,181,601 $1,901,468 
Special items (1)
— 1,302 — 2,955 
Adjusted gross profit$740,923 $626,736 $2,181,601 $1,904,423 
Gross margin38.1 %36.5 %38.1 %37.0 %
Adjusted gross margin38.1 %36.6 %38.1 %37.1 %
Net income$91,610 $65,313 $300,999 $208,807 
Income tax provision31,902 20,644 97,417 65,928 
Interest (income) expense, net(1,061)1,698 (382)6,058 
Earnings before interest and taxes (EBIT)122,451 87,655 398,034 280,793 
Special items (2)
— 2,392 — 46,034 
Adjusted EBIT122,451 90,047 398,034 326,827 
Depreciation, amortization and accretion, adjusted for special items36,125 33,655 103,881 97,789 
Adjusted EBITDA$158,576 $123,702 $501,915 $424,616 
Net income$91,610 $65,313 $300,999 $208,807 
Special items, net of tax (2)
— 1,780 — 34,272 
Adjusted net income$91,610 $67,093 $300,999 $243,079 
Diluted earnings per share$0.91 $0.64 $2.97 $2.01 
Adjusted diluted earnings per share$0.91 $0.65 $2.97 $2.34 
Diluted weighted average shares outstanding101,025102,703101,469103,758
(1)For the thirteen and thirty-nine weeks ended September 29, 2024, there were no special items. For the thirteen and thirty-nine weeks ended October 1, 2023, special items included approximately $1 million and $3 million, respectively, in Cost of sales related to store closures and our supply chain transition.
(2)For the thirteen and thirty-nine weeks ended September 29, 2024, there were no special items. For the thirteen weeks ended October 1, 2023, special items included approximately $1 million in Selling, general and administrative expenses primarily related to store closures and $1 million in Cost of sales related to our supply chain transition. For the thirty-nine weeks ended October 1, 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.
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Source: Sprouts Farmers Market, Inc
Phoenix, AZ
10/30/24