Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results
for the 13-week fourth quarter and 52-week year ended December 29,
2019.
Fourth Quarter Highlights:
- Net sales of $1.4 billion; an 8% increase from the same period
in 2018
- Comparable store sales growth of 1.5% and two-year comparable
store sales growth of 3.8%
- Net income of $32 million; compared to net income of $13
million and adjusted net income of $24 million from the same period
in 2018
- Diluted earnings per share of $0.27; compared to diluted
earnings per share of $0.10 and adjusted diluted earnings per share
of $0.19 from the same period in 2018
Fiscal Year 2019
Highlights:
- Net sales of $5.6 billion; an 8% increase from 2018
- Comparable store sales growth of 1.1% and two-year comparable
store sales growth of 3.2%
- Net income and adjusted net income of $150 million; compared to
net income of $159 million and adjusted net income of $168 million
in 2018
- Diluted earnings and adjusted diluted earnings per share of
$1.25; compared to diluted earnings per share of $1.22 and adjusted
diluted earnings per share of $1.29 in 2018
“During the fourth quarter, I was encouraged by the Sprouts
team’s dedication to driving same store sales growth, while we
simultaneously delivered positive margins,” said Jack Sinclair,
chief executive officer of Sprouts Farmers Market. “We
remain engaged in developing a long-term strategy and are
optimistic about the future of Sprouts rooted in a brand that is
good for you, good for your family and good for the planet.”
2020 First Quarter and Full Year Outlook
The following provides information on our outlook for 2020,
which does not factor in any strategic changes. In addition, the
Company notes the fiscal year 2020 will be a 53-week year, with the
extra week falling in the fourth quarter. We estimate the
impact from the 53rd week to be approximately $120 million in
sales, $9 million in income before income taxes, and $0.06 in
diluted earnings per share:
|
|
|
|
Full year
2020 Outlook |
|
|
|
Q1 2020 Outlook |
|
(52-Week) |
|
Net sales
growth |
|
5.5% to
6.5% |
|
5.5% to
6.5% |
|
Comparable store sales growth |
|
0% to
1% |
|
0% to
1% |
|
Unit growth |
|
|
|
Approximately 20 |
|
Diluted
earnings per share |
|
$0.45 to
$0.47 |
|
$1.17 to
$1.23 |
|
Earnings
before taxes ("EBT") Growth |
|
|
|
$187M to
$197M |
|
Effective
tax rate |
|
|
|
Approximately 26% |
|
Capital
expenditures (net of landlord reimbursements) |
|
|
|
$120M to
$130M |
|
Fourth Quarter and Full Year 2019 Conference
Call
We will hold a conference call at 3 p.m. Mountain Standard Time
(5 p.m. Eastern Standard Time) on Thursday, February 20, 2020
during which Sprouts executives will further discuss our fourth
quarter and fiscal year 2019 financial results.
A webcast of the conference call will be available through
Sprouts’ investor webpage located at investors.sprouts.com.
Participants should register on the website approximately 10
minutes prior to the start of the webcast.
The conference call will be available via the following dial-in
numbers:
- U.S. Participants: 877-398-9481
- International Participants: +1-408-337-0130
- Conference ID: 9977410
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:
9977410.
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 guidance, outlook, growth and
opportunities. 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 company’s ability to successfully compete in its intensely
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; 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. 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
About Sprouts Farmers Market Sprouts Farmers
Market, Inc., one of the fastest-growing retailers in the
country, has made healthy living accessible to shoppers for nearly
two decades by offering affordable, fresh, natural and organic
products. True to its farmers market heritage, Sprouts is known for
pioneering its unique grocery model by offering a welcoming store
layout featuring fresh produce at the center of the store, an
expansive bulk foods section, and a vitamin department focused on
overall wellness. Sprouts also offers a unique assortment of
healthier products with special attributes, such as plant-based,
gluten-free, keto-friendly, and grass-fed, to meet the growing and
diverse needs of today’s consumer. Headquartered in Phoenix, Ariz.,
Sprouts employs more than 30,000 team members and operates over 340
stores in 22 states from coast to coast.
Visit about.sprouts.com for more information.
SPROUTS FARMERS MARKET, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Fifty-two weeks ended |
|
|
December 29, 2019 |
|
December 30, 2018 |
|
December 29, 2019 |
|
December 30, 2018 |
Net sales |
|
$ |
1,364,991 |
|
$ |
1,269,338 |
|
$ |
5,634,835 |
|
$ |
5,207,336 |
Cost of
sales |
|
|
896,028 |
|
|
848,369 |
|
|
3,740,017 |
|
|
3,459,861 |
Gross profit |
|
|
468,963 |
|
|
420,969 |
|
|
1,894,818 |
|
|
1,747,475 |
Selling,
general and administrative expenses |
|
|
387,481 |
|
|
352,672 |
|
|
1,549,707 |
|
|
1,404,443 |
Depreciation
and amortization (exclusive of depreciation included in cost of
sales) |
|
|
30,703 |
|
|
27,966 |
|
|
120,491 |
|
|
108,045 |
Store
closure and other costs |
|
|
3,864 |
|
|
11,579 |
|
|
7,260 |
|
|
12,076 |
Income from operations |
|
|
46,915 |
|
|
28,752 |
|
|
217,360 |
|
|
222,911 |
Interest
expense, net |
|
|
5,195 |
|
|
7,420 |
|
|
21,192 |
|
|
27,435 |
Other
income |
|
|
— |
|
|
— |
|
|
— |
|
|
320 |
Income before income taxes |
|
|
41,720 |
|
|
21,332 |
|
|
196,168 |
|
|
195,796 |
Income tax
provision |
|
|
10,086 |
|
|
8,629 |
|
|
46,539 |
|
|
37,260 |
Net income |
|
$ |
31,634 |
|
$ |
12,703 |
|
$ |
149,629 |
|
$ |
158,536 |
Net income
per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.27 |
|
$ |
0.10 |
|
$ |
1.25 |
|
$ |
1.23 |
Diluted |
|
$ |
0.27 |
|
$ |
0.10 |
|
$ |
1.25 |
|
$ |
1.22 |
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
117,934 |
|
|
126,574 |
|
|
119,368 |
|
|
128,827 |
Diluted |
|
|
118,219 |
|
|
127,398 |
|
|
119,742 |
|
|
129,776 |
|
|
|
|
|
|
|
|
|
SPROUTS FARMERS MARKET, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
December 29, 2019 |
|
December 30, 2018 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
85,314 |
|
|
$ |
1,588 |
|
Accounts receivable, net |
|
|
15,713 |
|
|
|
40,564 |
|
Inventories |
|
|
275,979 |
|
|
|
264,366 |
|
Prepaid expenses and other current assets |
|
|
10,833 |
|
|
|
27,323 |
|
Total
current assets |
|
|
387,839 |
|
|
|
333,841 |
|
Property and
equipment, net of accumulated depreciation |
|
|
741,508 |
|
|
|
766,429 |
|
Operating
lease assets |
|
|
1,028,436 |
|
|
|
— |
|
Intangible
assets, net of accumulated amortization |
|
|
185,395 |
|
|
|
194,803 |
|
Goodwill |
|
|
368,078 |
|
|
|
368,078 |
|
Other
assets |
|
|
11,727 |
|
|
|
12,463 |
|
Total assets |
|
$ |
2,722,983 |
|
|
$ |
1,675,614 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
261,326 |
|
|
$ |
253,969 |
|
Accrued salaries and benefits |
|
|
48,579 |
|
|
|
48,603 |
|
Current portion of capital and financing lease obligations |
|
|
— |
|
|
|
7,428 |
|
Current portion of operating lease liabilities |
|
|
106,153 |
|
|
|
— |
|
Current portion of finance lease liabilities |
|
|
754 |
|
|
|
— |
|
Total
current liabilities |
|
|
416,812 |
|
|
|
310,000 |
|
Long-term
capital and financing lease obligations |
|
|
— |
|
|
|
119,642 |
|
Long-term
operating lease liabilities |
|
|
1,078,927 |
|
|
|
— |
|
Long-term
debt and finance lease liabilities |
|
|
549,419 |
|
|
|
453,000 |
|
Other
long-term liabilities |
|
|
41,517 |
|
|
|
153,377 |
|
Deferred
income tax liability |
|
|
54,356 |
|
|
|
50,399 |
|
Total liabilities |
|
|
2,141,031 |
|
|
|
1,086,418 |
|
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,
117,543,668 shares issued and outstanding, December 29, 2019;
124,975,691 shares issued and outstanding, December 30, 2018 |
|
|
117 |
|
|
|
124 |
|
Additional paid-in capital |
|
|
670,966 |
|
|
|
657,140 |
|
Accumulated other comprehensive (loss) income |
|
|
(4,682 |
) |
|
|
1,134 |
|
Accumulated deficit |
|
|
(84,449 |
) |
|
|
(69,202 |
) |
Total
stockholders' equity |
|
|
581,952 |
|
|
|
589,196 |
|
Total liabilities and stockholders' equity |
|
$ |
2,722,983 |
|
|
$ |
1,675,614 |
|
|
|
|
|
|
SPROUTS FARMERS MARKET, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS (IN THOUSANDS)
|
|
|
|
|
|
|
Fifty-two weeks ended |
|
|
December 29, 2019 |
|
December 30, 2018 |
Cash
flows from operating activities |
|
|
|
|
Net income |
|
$ |
149,629 |
|
|
$ |
158,536 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization expense |
|
|
122,804 |
|
|
|
110,749 |
|
Operating lease asset amortization |
|
|
81,842 |
|
|
|
— |
|
Store closure and other costs |
|
|
4,113 |
|
|
|
4,115 |
|
Share-based compensation |
|
|
8,949 |
|
|
|
14,512 |
|
Deferred income taxes |
|
|
(216 |
) |
|
|
23,333 |
|
Other non-cash items |
|
|
4,136 |
|
|
|
1,482 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
36,062 |
|
|
|
(7,666 |
) |
Inventories |
|
|
(11,612 |
) |
|
|
(34,824 |
) |
Prepaid expenses and other current assets |
|
|
19,208 |
|
|
|
(2,908 |
) |
Other assets |
|
|
(1,275 |
) |
|
|
(5,086 |
) |
Accounts payable and other accrued liabilities |
|
|
28,699 |
|
|
|
4,366 |
|
Accrued salaries and benefits |
|
|
295 |
|
|
|
3,039 |
|
Operating lease liabilities |
|
|
(88,002 |
) |
|
|
— |
|
Other long-term liabilities |
|
|
578 |
|
|
|
24,731 |
|
Cash flows from operating activities |
|
|
355,210 |
|
|
|
294,379 |
|
Cash
flows used in investing activities |
|
|
|
|
Purchases of
property and equipment |
|
|
(183,232 |
) |
|
|
(177,082 |
) |
Cash flows used in investing activities |
|
|
(183,232 |
) |
|
|
(177,082 |
) |
Cash
flows used in financing activities |
|
|
|
|
Proceeds
from revolving credit facilities |
|
|
265,405 |
|
|
|
233,000 |
|
Payments on
revolving credit facilities |
|
|
(180,405 |
) |
|
|
(128,000 |
) |
Payments on
capital and financing lease obligations |
|
|
— |
|
|
|
(4,517 |
) |
Payments on
finance lease obligations |
|
|
(690 |
) |
|
|
— |
|
Payments of
deferred financing costs |
|
|
— |
|
|
|
(2,131 |
) |
Cash from
landlords related to capital and financing lease obligations |
|
|
— |
|
|
|
3,643 |
|
Repurchase
of common stock |
|
|
(176,310 |
) |
|
|
(258,307 |
) |
Proceeds
from exercise of stock options |
|
|
4,878 |
|
|
|
21,843 |
|
Other |
|
|
(319 |
) |
|
|
(59 |
) |
Cash flows used in financing activities |
|
|
(87,441 |
) |
|
|
(134,528 |
) |
Increase / (Decrease) in cash, cash equivalents, and
restricted cash |
|
|
84,537 |
|
|
|
(17,231 |
) |
Cash, cash
equivalents, and restricted cash at beginning of the period |
|
|
2,248 |
|
|
|
19,479 |
|
Cash, cash
equivalents, and restricted cash at the end of the period |
|
$ |
86,785 |
|
|
$ |
2,248 |
|
|
|
|
|
|
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
income before income taxes (adjusted EBT), 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 EBT, 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 you should not consider them in isolation or
as a substitute for analysis of the company’s results as reported
under GAAP.
The following table shows a reconciliation of EBITDA and
adjusted EBITDA to net income for the thirteen and fifty-two weeks
ended December 29, 2019 and December 30, 2018 and a reconciliation
of EBT, net income and diluted earnings per share to adjusted EBT,
adjusted net income and adjusted diluted earnings per share for the
thirteen and fifty-two weeks ended December 29, 2019 and December
30, 2018:
SPROUTS FARMERS MARKET, INC. AND
SUBSIDIARIESNON-GAAP MEASURE
RECONCILIATION(UNAUDITED)(IN
THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Fifty-two weeks ended |
|
|
December 29, 2019 |
|
December 30, 2018 |
|
December 29, 2019 |
|
December 30, 2018 |
Net income |
|
$ |
31,634 |
|
$ |
12,703 |
|
$ |
149,629 |
|
$ |
158,536 |
|
Income tax
provision (1) |
|
|
10,086 |
|
|
8,629 |
|
|
46,539 |
|
|
37,260 |
|
Income
before income taxes (Earnings before taxes "EBT") |
|
|
41,720 |
|
|
21,332 |
|
|
196,168 |
|
|
195,796 |
|
Special
Items: |
|
|
|
|
|
|
|
|
Executive Compensation (2) |
|
|
— |
|
|
3,618 |
|
|
508 |
|
|
3,618 |
|
Store closures (3) |
|
|
— |
|
|
7,961 |
|
|
— |
|
|
7,961 |
|
Total Special Items - pre-tax |
|
|
— |
|
|
11,579 |
|
|
508 |
|
|
11,579 |
|
Adjusted
EBT |
|
$ |
41,720 |
|
$ |
32,911 |
|
$ |
196,676 |
|
$ |
207,375 |
|
Net
income |
|
$ |
31,634 |
|
$ |
12,703 |
|
$ |
149,629 |
|
$ |
158,536 |
|
Income tax
provision (1) |
|
|
10,086 |
|
|
8,629 |
|
|
46,539 |
|
|
37,260 |
|
Interest
expense, net |
|
|
5,195 |
|
|
7,420 |
|
|
21,192 |
|
|
27,435 |
|
Earnings
before interest and taxes (EBIT) |
|
|
46,915 |
|
|
28,752 |
|
|
217,360 |
|
|
223,231 |
|
Depreciation, amortization and accretion |
|
|
31,258 |
|
|
28,571 |
|
|
122,804 |
|
|
110,749 |
|
Earnings
before interest, taxes, depreciation and amortization (EBITDA) |
|
$ |
78,173 |
|
$ |
57,323 |
|
$ |
340,164 |
|
$ |
333,980 |
|
Special
Items: |
|
|
|
|
|
|
|
|
Executive Compensation (2) |
|
|
— |
|
|
3,618 |
|
|
508 |
|
|
3,618 |
|
Store closures (3) |
|
|
— |
|
|
7,961 |
|
|
— |
|
|
7,961 |
|
Total Special Items - pre-tax |
|
|
— |
|
|
11,579 |
|
|
508 |
|
|
11,579 |
|
Adjusted EBITDA |
|
$ |
78,173 |
|
$ |
68,902 |
|
$ |
340,672 |
|
$ |
345,559 |
|
Net
income |
|
$ |
31,634 |
|
$ |
12,703 |
|
$ |
149,629 |
|
$ |
158,536 |
|
Special
Items: |
|
|
|
|
|
|
|
|
Executive compensation, net of tax (2) |
|
|
— |
|
|
5,652 |
|
|
— |
|
|
5,652 |
|
Store closures, net of tax (3) |
|
|
— |
|
|
5,921 |
|
|
377 |
|
|
5,921 |
|
Adjusted Net income before one-time tax benefit |
|
|
31,634 |
|
|
24,276 |
|
|
150,006 |
|
|
170,109 |
|
Income tax benefit related to Tax Act and other one-time tax
benefits (4) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,573 |
) |
Adjusted Net
income |
|
$ |
31,634 |
|
$ |
24,276 |
|
$ |
150,006 |
|
$ |
167,536 |
|
Diluted
earnings per share |
|
$ |
0.27 |
|
$ |
0.10 |
|
$ |
1.25 |
|
$ |
1.22 |
|
Adjusted
diluted earnings per share |
|
$ |
0.27 |
|
$ |
0.19 |
|
$ |
1.25 |
|
$ |
1.29 |
|
Diluted
weighted average shares outstanding |
|
|
118,219 |
|
|
127,398 |
|
|
119,742 |
|
|
129,776 |
|
- Income tax provision includes approximately a $12 million (or
$0.10 per diluted share) benefit during the fifty-two weeks ended
December 30, 2018 in excess federal and state tax for share based
compensation primarily associated with the exercise of expiring
pre-IPO options.
- During the thirteen and fifty-two weeks ended December 30,
2018, the Company recorded one-time pre-tax compensation charges of
$4 million associated with the resignation of the former CEO. The
after-tax impact includes incremental tax expense associated with
certain nondeductible executive compensation costs.
- During the thirteen and fifty-two weeks ended December 30,
2018, in connection with the closure to two stores, the Company
recorded one-time non-cash pre-tax charges of $8 million primarily
related to the estimated fair value of the lease termination
obligations and asset impairments. After-tax impact includes the
tax benefit on the pre-tax charge.
- During the fifty-two weeks ended December 30, 2018, the Company
adopted a tax calculation method change for the accelerated
deduction of certain items, resulting in a discrete tax benefit of
$3 million.
Source: Sprouts Farmers Market, Inc.Phoenix, AZ2/20/2020
|
|
Investor
Contact: |
Media
Contact: |
Susannah Livingston |
Diego Romero |
(602) 682-1584 |
(602) 682-3173 |
susannahlivingston@sprouts.com |
media@sprouts.com |
Sprouts Farmers Market (NASDAQ:SFM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Sprouts Farmers Market (NASDAQ:SFM)
Historical Stock Chart
From Apr 2023 to Apr 2024