August 23, 2014 3:49 PM ET

Food and Staples Retailing

Company Overview of Sprouts Farmers Market, Inc.

Company Overview

Sprouts Farmers Market, Inc., through its subsidiaries, is engaged in the retail of natural and organic food in the United States. The company offers fresh produce, bulk foods, vitamins and supplements, grocery products, meat and seafood products, deli and bakery products, dairy and dairy alternatives, frozen foods, beer and wine, natural health and body care products, and natural household products. As of August 7, 2014, it operated 182 stores in 10 states. Sprouts Farmers Market, Inc. was founded in 2002 and is based in Phoenix, Arizona.

11811 North Tatum Boulevard

Suite 2400

Phoenix, AZ 85028

United States

Founded in 2002

14,000 Employees

Phone:

480-814-8016

Key Executives for Sprouts Farmers Market, Inc.

Chief Executive Officer and President
Age: 45
Total Annual Compensation: $500.0K
Chief Financial Officer and Treasurer
Age: 42
Total Annual Compensation: $360.8K
Chief Operating Officer
Age: 43
Total Annual Compensation: $334.9K
Chief Marketing & Information Officer
Age: 54
Total Annual Compensation: $244.2K
Chief Legal Officer and Corporate Secretary
Age: 37
Total Annual Compensation: $257.7K
Compensation as of Fiscal Year 2013.

Sprouts Farmers Market, Inc. Key Developments

Sprouts Farmers Market, Inc. Enters Amended and Restated Distribution Agreement with Nature's Best

On August 13, 2014, Sprouts Farmers Market, Inc. entered into an amended and restated distribution agreement with Nature's Best, primary supplier of dry grocery and frozen food products. This agreement amends and restates prior distribution agreement with Nature's Best, effective as of April 14, 2010. The new agreement enhances and supplements to the prior agreement with Nature's Best, including terms relating to service level arrangements, deficiency cures, product management procedures, and other ordinary course operational terms provided to the company by Nature's Best. The term, cost-plus pricing structure, and other material terms of the original agreement with Nature's Best remain unchanged by the new agreement.

Sprouts Farmers Market, Inc. Reports Unaudited Consolidated Earnings Results for the Second Quarter and Six Months Ended June 29, 2014; Provides Comparable Store Sales Guidance for the Third Quarter of 2014; Revised Earnings Guidance for the Full Year of 2014

Sprouts Farmers Market, Inc. reported unaudited consolidated earnings results for the second quarter and six months ended June 29, 2014. For the quarter, the company reported net sales of $743.810 million against $622.367 million a year ago. Income from operations was $55.573 million against $40.078 million a year ago. Income before income taxes was $49.153 million against $20.623 million a year ago. Net income was $30.151 million or $0.20 per diluted share against $12.468 million or $0.10 per diluted share a year ago. Adjusted net income was $30.218 million or $0.20 per diluted share against $17.973 million $0.14 per diluted share a year ago. Adjusted earnings before interest and taxes (EBIT) were $55.782 million against $41.119 million a year ago. Adjusted EBITDA was $69.104 million against $52.717 million a year ago. Net sales growth was driven by strong performance in new stores opened, including the Company's first new store in the Atlanta market, and a 9.5% increase in comparable store sales growth. The increase in net income and adjusted income was driven by higher sales and operating leverage. In addition, net income benefited from lower interest expense due to a lower principal balance on the term loan and a decrease of interest expense from the April 2013 refinancing. For the six months, the company reported net sales of $1,466.416 million against $1,196.061 million a year ago. Income from operations was $117.242 million against $80.124 million a year ago. Income before income taxes was $104.451 million against $50.637 million a year ago. Net income was $63.884 million or $0.42 per diluted share against $30.585 million or $0.24 per diluted share a year ago. Net cash provided by operating activities was $137.889 million against $96.549 million a year ago. Purchases of property and equipment were $57.793 million against $51.676 million a year ago. Adjusted net income was $65.580 million $0.43 per diluted share against $36.548 million $0.28 per diluted share a year ago. Adjusted earnings before interest and taxes (EBIT) were $120.211 million against $82.060 million a year ago. Adjusted EBITDA was $146.568 million against $104.770 million a year ago. Growth in sales was driven by an 11.1% increase in comparable store sales growth and strong performance in new stores opened. The company provided comparable store sales guidance for the third quarter of 2014. The company expects comparable store sales growth in the range of 8.5% to 9.5% and two-year combined pro forma comparable store sales growth in the range of 18.5% to 19.5%. The company revised earnings guidance for the full year of 2014. Currently the company expects net sales growth of 19% to 20%, comparable store sales growth of 8.5% to 9.5%, adjusted EBITDA growth of 25% to 27%, adjusted net income growth of 45% plus, adjusted diluted earnings per share of $0.65 to $0.67 and capital expenditures in the range of $110 million to $120 million compared to previously expected net sales growth of 18% to 20%, comparable store sales growth of 8.5% to 9.5%, adjusted EBITDA growth of 23% to 25%, adjusted net income growth of 40% plus, adjusted diluted earnings per share of $0.63 to $0.65 and capital expenditures in the range of $110 million to $120 million.

Sprouts Farmers Market, Inc. to Open 24 Stores 2014

Sprouts Farmers Market, Inc. expects to open a total of 24 stores during 2014.

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