EX-99.1 2 sfm-ex99_1.htm EX-99.1 EX-99.1

 

 

Exhibit 99.1

 

img407723_0.jpg 

 

 

 

 

Investor Contact:

Media Contact:

 

Susannah Livingston

media@sprouts.com

 

(602) 682-1584

 

 

susannahlivingston@sprouts.com

 

 

 

Sprouts Farmers Market, Inc. Reports Fourth Quarter and Full Year 2021 Results

PHOENIX, Ariz. – (Globe Newswire) – February 24, 2022 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week fourth quarter and 52-week year ending January 2, 2022.Period-over-period comparison stated herein reflect 13 and 52 weeks in the fourth quarter and fiscal year 2021 to 14 and 53 weeks in the fourth quarter and fiscal year 2020, respectively, unless otherwise noted(1).

"We are pleased that results for both sales and earnings exceeded our expectations for the quarter and are encouraged by the fact that we experienced quarterly positive comp transactions,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "We made progress in 2021 on our strategic roadmap, which sets us up for continued growth and financial success in the years to come. More importantly, I am amazed each and every day by the incredible contribution and dedication of our approximately 31,000 team members, who are committed to providing a broad array of healthy options at great prices for Sprouts' customers."

 

Fourth Quarter Highlights(2):

•
Net sales totaled $1.49 billion; a 7% decrease from the same period in 2020, primarily due to the $122 million in sales during the extra week of the fourth quarter of 2020. Net sales increased 9% from the same period in 2019
•
Comparable store sales growth of -1.1% and two-year comparable store sales growth of 2.7%(3)
•
Gross margin of 35.7%, a decrease of approximately 100 basis points to the same period in 2020 and an increase of approximately 135 basis points from the same period in 2019
•
Selling, general and administrative expenses ("SG&A") totaled $449 million, a decrease of $15 million primarily due to the $29 million of SG&A costs for the extra week in 2020. SG&A increased 15.8% compared to the same period in 2019
•
Net income of $36 million; compared to net income of $68 million and adjusted net income(4) of $70 million in the same period in 2020; and compared to net income of $32 million from the same period in 2019
•
Diluted earnings per share of $0.32; compared to $0.58 diluted earnings per share and adjusted diluted earnings per share(4) of $0.59 in the same period in 2020; and compared to $0.27 diluted earnings per share from the same period in 2019

 

Fiscal Year 2021 Highlights(2):

•
Net sales of $6.1 billion; a 6% decrease from 2020, primarily due to cycling the demand from the COVID-19 pandemic, as well as the 53rd week in 2020. Net sales increased 8% from the same period 2019
•
Comparable store sales growth of -6.7% and two-year comparable store sales growth of 0.4%(3)
•
Gross margin of 36.2%, a decrease of approximately 55 basis points compared to the same period in 2020 and an increase of approximately 260 basis points from the same period in 2019
•
SG&A totaled $1.75 billion, a decrease of $116 million, reflective of lower COVID-19 pandemic response costs in 2021 and the 53rd week in 2020. SG&A increased 12.8% compared to the same period in 2019
•
Net income of $244 million; compared to net income of $287 million and adjusted net income(4) of $294 million in 2020; and compared to net income of $150 million in 2019

 

 

•
Diluted earnings per share of $2.10; compared to $2.43 diluted earnings per share and adjusted diluted earnings per share(4) of $2.49 in 2020; and compared to $1.25 diluted earnings per share in 2019
•
Sprouts opened 12 new stores and relocated one, resulting in 374 stores in 23 states as of January 2, 2022

 

Leverage and Liquidity in 2021

•
Generated cash from operations of $365 million
•
Invested $81 million in capital expenditures net of landlord reimbursement, primarily for new stores
•
Repurchased 7.4 million shares of common stock for a total investment of $188 million.
•
Sprouts ended the year with:
o
$250 million balance on its revolving credit facility
o
$28 million of letters of credit outstanding under the facility
o
$245 million in cash and cash equivalents
o
$112 million available under the current share repurchase authorization.

 

 

1 2020 included a 14th week in the fourth quarter. This extra week added approximately $122 million to sales, $16 million to EBIT and $0.10 to diluted earnings per share in the fourth quarter of 2020.

 

2 The Company’s results for the fourth quarter of 2020 and FY 2020 were significantly impacted by the COVID-19 pandemic. Accordingly, this presentation also includes certain comparisons to results in the fourth quarter of 2019 and FY 2019.

 

3 To account for the 53rd week in fiscal 2020 we shifted each week back one week, thereby ignoring the first week of fiscal 2020 to better align holidays for comparison purposes. More information can be found at investors.sprouts.com under additional reports.

 

4 Adjusted net income and adjusted diluted earnings per share, non-GAAP financial measures, exclude the impact of certain special items. There were no such adjustments for the quarter or fiscal year ended January 2, 2022 or the quarter ended December 29, 2019. See the “Non-GAAP Financial Measures” section of this release for additional information about these items.

 

 

 

 

 

 

Outlook

The following provides our expected outlook for first quarter and full-year 2022:

 

 

 

 

 

First Quarter and Full Year 2022 Outlook

 

 

 

 

Q1 2022

Full-Year 2022 Outlook

 

Net sales growth

 

4.0% to 6.0%

 

Unit growth

 

15 to 20 new stores

 

Comparable store sales growth

0.0% to 2.0%

0.0% to 2.0%

 

Adjusted EBIT

 

$330M to $345M

 

Adjusted diluted earnings per share

$0.69 to $0.73

$2.14 to $2.24

 

Effective tax rate

 

Approximately 25%

 

Capital expenditures

 

$150M to $170M

 

(net of landlord reimbursements)

 

 

 

 

 

 

Fourth Quarter and Full Year 2021 Conference Call

Sprouts will hold a conference call at 3 p.m. Mountain Standard Time (5 p.m. Eastern Standard Time) on Thursday, February 24, 2022, during which Sprouts executives will further discuss fourth quarter and fiscal year 2021 financial results.

A webcast of the conference call will be available through Sprouts’ investor relations webpage located at investors.sprouts.com. Participants should register on the website approximately 15 minutes prior to the start of the webcast.

The audio replay will remain available for 72 hours and can be accessed by dialing 855-859-2056 (toll-free) or 404-537-3406 (international) and entering the confirmation code: 6589237.

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, risks associated with the impact of the COVID-19 pandemic; 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; accounting standard changes; 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

Sprouts is the place where goodness grows. 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 fastest-growing retailers in the country, Sprouts employs approximately 31,000 team members and operates more than 370 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

 

 

Fourteen weeks ended

 

 

Fifty-two weeks ended

 

 

Fifty-three weeks ended

 

 

 

January 2,
2022

 

 

January 3,
2021

 

 

January 2,
2022

 

 

January 3,
2021

 

Net sales

 

$

1,492,796

 

 

$

1,601,834

 

 

$

6,099,869

 

 

$

6,468,759

 

Cost of sales

 

 

959,568

 

 

 

1,013,805

 

 

 

3,890,657

 

 

 

4,089,470

 

Gross profit

 

 

533,228

 

 

 

588,029

 

 

 

2,209,212

 

 

 

2,379,289

 

Selling, general and administrative expenses

 

 

448,707

 

 

 

463,635

 

 

 

1,748,205

 

 

 

1,863,869

 

Depreciation and amortization (exclusive of depreciation included
   in cost of sales)

 

 

30,222

 

 

 

31,487

 

 

 

122,258

 

 

 

124,124

 

Store closure and other costs, net

 

 

2,916

 

 

 

(25

)

 

 

4,673

 

 

 

(369

)

Income from operations

 

 

51,383

 

 

 

92,932

 

 

 

334,076

 

 

 

391,665

 

Interest expense, net

 

 

2,844

 

 

 

3,106

 

 

 

11,684

 

 

 

14,787

 

Income before income taxes

 

 

48,539

 

 

 

89,826

 

 

 

322,392

 

 

 

376,878

 

Income tax provision

 

 

12,311

 

 

 

21,429

 

 

 

78,235

 

 

 

89,428

 

Net income

 

$

36,228

 

 

$

68,397

 

 

$

244,157

 

 

$

287,450

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.58

 

 

$

2.12

 

 

$

2.44

 

Diluted

 

$

0.32

 

 

$

0.58

 

 

$

2.10

 

 

$

2.43

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

112,019

 

 

 

117,951

 

 

 

115,377

 

 

 

117,821

 

Diluted

 

 

112,786

 

 

 

118,315

 

 

 

116,077

 

 

 

118,224

 

 

 

 

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

 

 

January 2,
2022

 

 

January 3,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

245,287

 

 

$

169,697

 

Accounts receivable, net

 

 

21,574

 

 

 

14,815

 

Inventories

 

 

265,387

 

 

 

254,224

 

Prepaid expenses and other current assets

 

 

35,468

 

 

 

27,224

 

Total current assets

 

 

567,716

 

 

 

465,960

 

Property and equipment, net of accumulated depreciation

 

 

716,029

 

 

 

726,500

 

Operating lease assets, net

 

 

1,072,019

 

 

 

1,045,408

 

Intangible assets, net of accumulated amortization

 

 

184,960

 

 

 

184,960

 

Goodwill

 

 

368,878

 

 

 

368,878

 

Other assets

 

 

13,513

 

 

 

14,698

 

Total assets

 

$

2,923,115

 

 

$

2,806,404

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

145,901

 

 

$

139,337

 

Accrued liabilities

 

 

155,996

 

 

 

143,402

 

Accrued salaries and benefits

 

 

58,743

 

 

 

76,695

 

Current portion of operating lease liabilities

 

 

151,755

 

 

 

135,739

 

Current portion of finance lease liabilities

 

 

1,078

 

 

 

959

 

Total current liabilities

 

 

513,473

 

 

 

496,132

 

Long-term operating lease liabilities

 

 

1,095,909

 

 

 

1,069,535

 

Long-term debt and finance lease liabilities

 

 

259,656

 

 

 

260,459

 

Other long-term liabilities

 

 

36,306

 

 

 

40,912

 

Deferred income tax liability

 

 

57,895

 

 

 

58,073

 

Total liabilities

 

 

1,963,239

 

 

 

1,925,111

 

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,
111,114,374 shares issued and outstanding, January 2, 2022;
117,953,435 shares issued and outstanding, January 3, 2021

 

 

111

 

 

 

118

 

Additional paid-in capital

 

 

704,701

 

 

 

686,648

 

Accumulated other comprehensive loss

 

 

(3,758

)

 

 

(8,474

)

Retained earnings

 

 

258,822

 

 

 

203,001

 

Total stockholders’ equity

 

 

959,876

 

 

 

881,293

 

Total liabilities and stockholders’ equity

 

$

2,923,115

 

 

$

2,806,404

 

 

 

 

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

 

 

 

 

Fifty-two
weeks ended

 

 

Fifty-three
weeks ended

 

 

 

January 2,
2022

 

 

January 3,
2021

 

Operating activities

 

 

 

 

 

 

Net income

 

$

244,157

 

 

$

287,450

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

125,541

 

 

 

126,507

 

Operating lease asset amortization

 

 

108,517

 

 

 

99,276

 

Store closure and other costs, net

 

 

4,762

 

 

 

(321

)

Share-based compensation

 

 

15,883

 

 

 

14,339

 

Deferred income taxes

 

 

(178

)

 

 

3,717

 

Other non-cash items

 

 

1,167

 

 

 

3,683

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

16,928

 

 

 

25,977

 

Inventories

 

 

(11,417

)

 

 

21,754

 

Prepaid expenses and other current assets

 

 

(5,879

)

 

 

(14,970

)

Other assets

 

 

(1,782

)

 

 

(5,461

)

Accounts payable

 

 

4,523

 

 

 

20,184

 

Accrued liabilities

 

 

610

 

 

 

4,296

 

Accrued salaries and benefits

 

 

(17,951

)

 

 

28,116

 

Accrued income tax

 

 

—

 

 

 

(2,005

)

Operating lease liabilities

 

 

(120,483

)

 

 

(120,085

)

Other long-term liabilities

 

 

401

 

 

 

1,578

 

Cash flows from operating activities

 

 

364,799

 

 

 

494,035

 

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(102,378

)

 

 

(121,968

)

Cash flows used in investing activities

 

 

(102,378

)

 

 

(121,968

)

Financing activities

 

 

 

 

 

 

Payments on revolving credit facilities

 

 

—

 

 

 

(288,000

)

Payments on finance lease obligations

 

 

(685

)

 

 

(754

)

Repurchase of common stock

 

 

(188,343

)

 

 

—

 

Proceeds from exercise of stock options

 

 

2,170

 

 

 

1,343

 

Cash flows used in financing activities

 

 

(186,858

)

 

 

(287,411

)

Increase in cash, cash equivalents, and restricted cash

 

 

75,563

 

 

 

84,656

 

Cash, cash equivalents, and restricted cash at beginning of the period

 

 

171,441

 

 

 

86,785

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

247,004

 

 

$

171,441

 

 

 

 

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 EBITDA, adjusted EBITDA, adjusted EBIT, adjusted net income 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 and adjusted EBITDA as EBITDA excluding the impact of special items. The company defines adjusted EBIT, adjusted net income and adjusted diluted earnings per share by adjusting the applicable GAAP measure to remove 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 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 adjusted EBITDA to net income for the thirteen and fifty-two weeks ended January 2, 2022 and for the fourteen and fifty-three weeks ended January 3, 2021 and a reconciliation of EBIT, net income and diluted earnings per share to adjusted EBIT, adjusted net income and adjusted diluted earnings per share for the thirteen and fifty-two weeks ended January 2, 2022 and for the fourteen and fifty-three weeks ended January 3, 2021:

 

 

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NON-GAAP MEASURE RECONCILIATION

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

 

 

Thirteen
weeks ended

 

 

Fourteen
weeks ended

 

 

Fifty-two
weeks ended

 

 

Fifty-three
weeks ended

 

 

 

January 2,
2022

 

 

January 3,
2021

 

 

January 2,
2022

 

 

January 3,
2021

 

Net income

 

$

36,228

 

 

$

68,397

 

 

$

244,157

 

 

$

287,450

 

Income tax provision

 

 

12,311

 

 

 

21,429

 

 

 

78,235

 

 

 

89,428

 

Interest expense, net

 

 

2,844

 

 

 

3,106

 

 

 

11,684

 

 

 

14,787

 

Earnings before interest and taxes (EBIT)

 

 

51,383

 

 

 

92,932

 

 

 

334,076

 

 

 

391,665

 

Special Items:

 

 

 

 

 

 

 

 

 

 

 

 

Strategic initiatives (1)

 

 

—

 

 

 

1,802

 

 

 

—

 

 

 

8,835

 

Adjusted EBIT

 

 

51,383

 

 

 

94,734

 

 

 

334,076

 

 

 

400,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

31,119

 

 

 

32,080

 

 

 

125,541

 

 

 

126,508

 

Adjusted EBITDA

 

$

82,502

 

 

$

126,814

 

 

$

459,617

 

 

$

527,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

36,228

 

 

 

68,397

 

 

 

244,157

 

 

 

287,450

 

Special Items:

 

 

 

 

 

 

 

 

 

 

 

 

Strategic initiatives, net of tax (1)

 

 

—

 

 

 

1,339

 

 

 

—

 

 

 

6,565

 

Adjusted Net income

 

$

36,228

 

 

$

69,736

 

 

$

244,157

 

 

$

294,015

 

Diluted earnings per share

 

$

0.32

 

 

$

0.58

 

 

$

2.10

 

 

$

2.43

 

Adjusted diluted earnings per share

 

$

0.32

 

 

$

0.59

 

 

$

2.10

 

 

$

2.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

112,786

 

 

 

118,315

 

 

 

116,077

 

 

 

118,224

 

 

 

(1)
Includes professional fees related to strategic initiatives. After-tax impact includes the tax benefit on the pre-tax charge.

 

 

###

 

Source: Sprouts Farmers Market, Inc

Phoenix, AZ

2/24/22