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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sprouts Farmers Market Inc | NASDAQ:SFM | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.21 | 1.62% | 75.80 | 75.49 | 77.19 | 75.785 | 74.54 | 74.59 | 795,913 | 01:00:00 |
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 first quarter 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
$
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
ASSETS
Current assets:
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 authorized, no shares issued and outstanding
—
—
Common stock, $0.001 par value; 200,000,000 shares authorized, 101,211,984 shares issued and outstanding, December 31, 2023; 105,072,756 shares issued and outstanding, January 1, 2023
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240222910337/en/
Investor Contact: Susannah Livingston (602) 682-1584 susannahlivingston@sprouts.com
Media Contact: media@sprouts.com
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