[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements for the thirteen and thirty-nine weeks ended October 1, 2023, covering balance sheets, income, and cash flows, along with detailed notes on key activities [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of October 1, 2023, total assets increased to **$3.29 billion** from **$3.07 billion**, driven by operating lease assets and property, with total liabilities rising to **$2.18 billion** and stockholders' equity reaching **$1.12 billion** Balance Sheet Summary (in thousands) | Account | October 1, 2023 | January 1, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $620,551 | $673,804 | | **Total Assets** | $3,290,508 | $3,070,380 | | **Total Current Liabilities** | $541,545 | $522,380 | | **Total Liabilities** | $2,175,499 | $2,023,918 | | **Total Stockholders' Equity** | $1,115,009 | $1,046,462 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net sales increased to **$1.71 billion** in Q3 and **$5.14 billion** YTD, but higher SG&A and store closure costs led to a slight decrease in Q3 net income and a 3.3% decline YTD to **$208.8 million** Income Statement - Thirteen Weeks Ended (in thousands) | Metric | October 1, 2023 | October 2, 2022 | | :--- | :--- | :--- | | Net Sales | $1,713,282 | $1,591,026 | | Gross Profit | $625,434 | $583,650 | | Income from Operations | $87,655 | $90,339 | | Net Income | $65,313 | $65,740 | | Diluted EPS | $0.64 | $0.61 | Income Statement - Thirty-nine Weeks Ended (in thousands) | Metric | October 1, 2023 | October 2, 2022 | | :--- | :--- | :--- | | Net Sales | $5,138,839 | $4,827,669 | | Gross Profit | $1,901,468 | $1,775,755 | | Store closure and other costs, net | $33,880 | $3,034 | | Income from Operations | $280,793 | $296,490 | | Net Income | $208,807 | $216,044 | | Diluted EPS | $2.01 | $1.97 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$409.0 million** YTD, while cash used in investing activities rose to **$178.0 million** and financing activities increased to **$272.3 million** due to debt repayments and share repurchases Cash Flow Summary - Thirty-nine Weeks Ended (in thousands) | Activity | October 1, 2023 | October 2, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $409,025 | $306,790 | | Net cash used in investing activities | ($178,048) | ($80,749) | | Net cash used in financing activities | ($272,320) | ($154,993) | | (Decrease)/Increase in cash | ($41,343) | $71,048 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail significant accounting policies and events, including the **$31.1 million** acquisition of Ronald Cohn, Inc., **11** store closures with a **$27.8 million** impairment, and **$182.0 million** in share repurchases YTD - On March 20, 2023, the company acquired Ronald Cohn, Inc., which owned two stores operating under the 'Sprouts Farmers Market' name, for **$18.1 million** in stock and **$13.0 million** in cash[108](index=108&type=chunk) - In 2023, the company closed **11** underperforming stores, resulting in a **$27.8 million** impairment charge for leasehold improvements and right-of-use assets[106](index=106&type=chunk) Share Repurchase Activity (YTD) | Period | Shares Acquired | Total Cost (in thousands) | | :--- | :--- | :--- | | Thirty-nine weeks ended Oct 1, 2023 | 5,307,759 | $181,974 | | Thirty-nine weeks ended Oct 2, 2022 | 5,437,054 | $155,094 | - Total assets increased to **$3.29 billion** as of October 1, 2023, from **$3.07 billion** as of January 1, 2023, primarily due to increases in operating lease assets and property and equipment[11](index=11&type=chunk) - Net cash provided by operating activities for the thirty-nine weeks ended October 1, 2023, was **$409.0 million**, a significant increase from **$306.8 million** in the prior-year period[24](index=24&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q3 2023 performance, highlighting an **8%** net sales increase driven by new stores and comparable sales growth, strategic initiatives, and operational results, noting impacts from higher SG&A and store closure costs on net income, while maintaining strong liquidity [Business Overview and Strategy](index=23&type=section&id=Business%20Overview%20and%20Strategy) Sprouts operates **401** stores in **23** states as a specialty retailer of fresh, natural, and organic food, with a strategy focused on target customers, smaller store formats, supply chain optimization, data analytics, and talent investment - As of October 1, 2023, the company operated **401** stores in **23** states[114](index=114&type=chunk) - Strategic pillars include: winning with target customers, updating store formats, creating an advantaged fresh supply chain, refining brand and marketing, and engaging talent[118](index=118&type=chunk)[121](index=121&type=chunk) - The company has opened **36** stores in its new, smaller format and aims for approximately **10%** annual unit growth starting in 2024[118](index=118&type=chunk) [Results of Operations (Q3 2023 vs Q3 2022)](index=25&type=section&id=Results%20of%20Operations%20for%20Thirteen%20Weeks%20Ended%20October%201%2C%202023) Q3 2023 net sales grew **8%** to **$1.7 billion** with **3.9%** comparable store sales growth, but higher SG&A and distribution costs led to a slight gross margin decrease and flat net income of **$65.3 million**, while diluted EPS rose to **$0.64** Q3 Performance Summary | Metric | Q3 2023 | Q3 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,713.3M | $1,591.0M | +8% | | Comparable Store Sales Growth | 3.9% | 2.4% | +1.5 p.p. | | Gross Margin | 36.5% | 36.7% | -0.2 p.p. | | SG&A as % of Sales | 29.3% | 29.0% | +0.3 p.p. | | Diluted EPS | $0.64 | $0.61 | +5% | [Results of Operations (YTD 2023 vs YTD 2022)](index=28&type=section&id=Results%20of%20Operations%20for%20Thirty-nine%20Weeks%20Ended%20October%201%2C%202023) YTD 2023 net sales increased **6%** to **$5.1 billion** with **3.4%** comparable store sales growth and improved gross margin, but a surge in store closure costs to **$33.9 million** led to a **3%** decrease in net income to **$208.8 million** YTD Performance Summary | Metric | YTD 2023 | YTD 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $5,138.8M | $4,827.7M | +6% | | Comparable Store Sales Growth | 3.4% | 2.0% | +1.4 p.p. | | Gross Margin | 37.0% | 36.8% | +0.2 p.p. | | Store closure costs, net | $33.9M | $3.0M | +1017% | | Net Income | $208.8M | $216.0M | -3% | | Diluted EPS | $2.01 | $1.97 | +2% | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operations, generating **$409.0 million** YTD, with cash used for **$178.0 million** in capital expenditures and **$272.3 million** in financing activities, including **$100.0 million** debt repayment and **$180.4 million** share repurchases - Cash flows from operating activities increased to **$409.0 million** YTD, up from **$306.8 million** in the prior year period[151](index=151&type=chunk)[152](index=152&type=chunk) - Financing activities used **$272.3 million** YTD, primarily for **$180.4 million** in stock repurchases and **$100.0 million** in payments on the Credit Agreement[156](index=156&type=chunk) - As of October 1, 2023, **$231.5 million** remained available under the **$600 million** share repurchase program authorized through December 31, 2024[160](index=160&type=chunk) - The company's long-term growth strategy focuses on winning with target customers, updating store formats, creating an advantaged fresh supply chain, refining marketing, and engaging talent[118](index=118&type=chunk)[121](index=121&type=chunk) - In the first 39 weeks of 2023, the company opened **24** new stores, acquired **2**, and closed **11** underperforming stores, ending the period with **401** stores[134](index=134&type=chunk) - Return on Invested Capital (ROIC), a non-GAAP measure, including operating leases, increased to **12.9%** for the rolling four quarters ended October 1, 2023, up from **12.0%** in the prior year period[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company's primary market risk is interest rate fluctuations on its variable-rate Credit Agreement, where a **100 basis point** change in SOFR would alter annual interest expense by **$1.5 million** on **$150.0 million** outstanding debt - The company is exposed to interest rate risk from its variable-rate Credit Agreement tied to SOFR[173](index=173&type=chunk) - A **1% (100 basis point)** change in SOFR would result in a **$1.5 million** annual change in interest expense based on the **$150.0 million** outstanding debt as of October 1, 2023[173](index=173&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of October 1, 2023, with no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of October 1, 2023[176](index=176&type=chunk) - There were no changes in internal controls over financial reporting during the third quarter of 2023 that materially affected, or were reasonably likely to materially affect, these controls[177](index=177&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in ordinary course legal proceedings, with the Proposition 65 Coffee Action lawsuit concluded in its favor in February 2023, and no expected material adverse effects from current cases - The company is party to legal proceedings arising in the ordinary course of business, which have not resulted in material losses to date[179](index=179&type=chunk) - The long-running Proposition 65 Coffee Action lawsuit was concluded in February 2023 when the Supreme Court of the State of California denied the plaintiff's petition for review, affirming a lower court's decision in favor of the defendants[69](index=69&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023 - There have been no material changes to the Risk Factors described in the company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023[182](index=182&type=chunk) [Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During Q3 2023, the company repurchased **831,416** shares for approximately **$32.1 million** under its **$600 million** program, with **$231.5 million** remaining available as of October 1, 2023 Share Repurchases in Q3 2023 | Period | Total Shares Purchased | Average Price Paid | Total Cost | | :--- | :--- | :--- | :--- | | July 3 - July 30, 2023 | 176,918 | $37.17 | ~$6.6M | | July 31 - Aug 27, 2023 | 265,699 | $38.02 | ~$10.1M | | Aug 28 - Oct 1, 2023 | 388,799 | $39.59 | ~$15.4M | | **Total** | **831,416** | **-** | **~$32.1M** | - The current **$600 million** share repurchase program is effective through December 31, 2024. As of October 1, 2023, **$231,462,000** remained available for repurchase[184](index=184&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information.) On August 11, 2023, CFO Lawrence Molloy adopted a Rule 10b5-1 trading plan for the sale of up to **108,568** shares of common stock, with no other such plans adopted or terminated by executives during the quarter - On August 11, 2023, CFO Lawrence Molloy adopted a Rule 10b5-1 trading plan for the sale of up to **108,568** shares of common stock[185](index=185&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Sections 302 and 906, and Inline XBRL data files - Filed exhibits include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[188](index=188&type=chunk) - The filing includes Inline XBRL documents for financial data tagging[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - For Q2 2023, total sales reached $1.7 billion, an increase of $97 million or 6% from the same period in 2022, driven by new store openings and comparable store sales growth of 3.2% [181][182] - Adjusted earnings before interest and taxes were $100 million, with adjusted net income at $73 million, and adjusted diluted earnings per share increased by 25% to $0.71 compared to the previous year [61][62] - Gross margin for Q2 was 37%, with an adjusted gross margin of 37.1%, reflecting a 70 basis point increase year-over-year [13][61] Business Line Data and Key Metrics Changes - The Sprouts brand sales grew by 12%, representing 20% of total sales, indicating strong performance in differentiated product categories [60][37] - E-commerce sales increased by 16%, accounting for 12.1% of total sales, showcasing growth in online channels [27][38] Market Data and Key Metrics Changes - The company opened six new stores in Q2, with plans to open at least 30 stores for the full year, focusing on expanding in existing markets [26][64] - New distribution centers in Southern California and Texas were established to enhance product freshness and support growth [26][182] Company Strategy and Development Direction - The company aims for 10% unit growth per year starting in 2024, with a focus on enhancing brand awareness and customer engagement in newer markets [64][47] - The strategy emphasizes differentiation in product offerings, particularly in health-oriented categories, to attract health-conscious consumers [30][60] Management's Comments on Operating Environment and Future Outlook - Management noted a slight tapering of year-over-year price inflation and unit declines as the year progresses, indicating a stabilizing environment [27][51] - The company expects sales growth in the range of 5% to 6% for the full year, with comparable sales growth of 2% to 3% [183][61] Other Important Information - The company has been investing in technology and processes to improve operational efficiency and customer experience, including new labor management systems and self-checkouts [175][34] - Cash and cash equivalents at the end of Q2 were $250 million, with $175 million outstanding on a $700 million revolver [35][61] Q&A Session Summary Question: How do you see the competitive environment for the rest of the year? - Management indicated that the competitive dynamic remains rational, with no significant concerns regarding pricing strategies [40][68] Question: Can you provide insights on volume improvements? - Management noted that while volumes are improving, they are still in decline, with specific categories like meat showing a slowdown in inflation rates [41][70] Question: What are the expectations for gross margin and SG&A in the second half? - Management expects gross margins to remain stable, while SG&A may experience slight deleverage due to new store growth and rising labor costs [183][110] Question: How is the company managing inflation and pricing? - The company is closely monitoring produce pricing and believes it is in a good position to manage costs effectively [68][82] Question: What is the outlook for the Sprouts brand and private label merchandise? - The Sprouts brand is expected to continue its growth trajectory, with a focus on differentiated products appealing to health-conscious consumers [130][60]

Financial Performance - For the thirteen weeks ended July 2, 2023, the Company reported net sales of $1,692.2 million, a 6.1% increase from $1,595.5 million for the same period in 2022[93]. - The Company’s net income for the thirteen weeks ended July 2, 2023, was $67.3 million, compared to $62.0 million for the same period in 2022, resulting in a basic net income per share of $0.65, up from $0.57[81]. - Net sales for the twenty-six weeks ended July 2, 2023, totaled $3.4 billion, an increase of $188.9 million, or 6%, compared to the same period last year[143]. - Comparable store sales growth was 3.2% for the thirteen weeks ended July 2, 2023, compared to 2.0% for the same period in 2022[130]. - Gross profit increased by $45,615 or 8% to $625,972 for the thirteen weeks ended July 2, 2023, with a gross margin of 37.0%, up from 36.4% in the prior year[131]. - Net income decreased by $6.8 million, or 5%, to $143.5 million, with a net income margin of 4.2%[151]. Debt and Financing - The Company reported a long-term debt of $175 million as of July 2, 2023, down from $250 million as of January 1, 2023, reflecting a principal payment of $75 million during the period[57]. - The Company has a maximum total net leverage ratio requirement of 3.75 to 1.00 under its Credit Agreement, which it was in compliance with as of July 2, 2023[62][63]. - The Company issued letters of credit totaling $21.5 million under its Credit Agreement as of July 2, 2023, primarily to support its insurance programs[50]. - The Company made no additional borrowings during the thirteen weeks ended July 2, 2023, maintaining total outstanding debt under the Credit Agreement at $175 million[57]. - Interest payments on the Credit Agreement are estimated to be approximately $35.4 million, with $11.0 million payable within the next 12 months[173]. - A 100 basis point change in SOFR would result in a change in interest expense of $1.8 million annually based on the $175.0 million principal outstanding[183]. Share Repurchase and Stock Performance - The Company repurchased 1,437,932 shares of common stock for a total cost of $50.5 million during the thirteen weeks ended July 2, 2023, at an average price of $35.10 per share[78]. - The total cost of common shares acquired during the twenty-six weeks ended July 2, 2023, was $149.6 million, compared to $111.1 million for the same period in 2022[78]. - The Company has a new $600 million share repurchase program authorized on March 2, 2022, replacing the previous $300 million program[74]. - The share repurchase program authorized $600 million, with $336.5 million spent as of July 2, 2023, leaving $263.5 million available for future repurchases[169]. - During the twenty-six weeks ended July 2, 2023, the company repurchased 4,476,343 shares at an average price of $33.43, totaling $149.6 million[170]. Tax and Benefits - The effective tax rate decreased to 24.7% for the thirteen weeks ended July 2, 2023, compared to 26.1% for the same period in 2022, primarily due to increased excess tax benefits from share-based payment awards[64]. - The Company recognized $3.0 million in excess tax benefits from share-based payment awards for the twenty-six weeks ended July 2, 2023, compared to $1.6 million for the same period in 2022[65]. - The effective tax rate decreased to 24.0% from 25.0% in the prior year, mainly due to increased excess tax benefits from share-based payment awards[150]. Store Operations and Growth - The company opened 26 new stores and remodeled one store featuring a new format through July 2, 2023, with plans for at least 10% annual unit growth beginning in 2024[123]. - The company opened 14 new stores and acquired 2 stores during the twenty-six weeks ended July 2, 2023, bringing the total number of stores to 391[142]. - Store closure and other costs increased significantly to $30,704 for the twenty-six weeks ended July 2, 2023, compared to $870 in the same period of 2022[142]. - The company closed 11 underperforming stores in February 2023, resulting in a charge of $27.8 million related to impairment of leasehold improvements and right-of-use assets[112]. Compensation and Stock Awards - The company granted a total of 495,931 RSUs, 172,059 PSAs, and 221,085 options under the 2022 Incentive Plan during the twenty-six weeks ended July 2, 2023[95]. - As of July 2, 2023, the company had 975,236 stock awards outstanding and 5,778,129 shares remaining available for issuance under the 2022 Incentive Plan[97]. - Share-based compensation expense for the twenty-six weeks ended July 2, 2023, was $9.461 million, compared to $7.920 million for the same period in 2022[108]. - As of July 2, 2023, total unrecognized compensation expense related to outstanding share-based awards was $34.444 million[108]. Legal and Regulatory Matters - The Company is exposed to claims and litigation matters, including a lawsuit related to Proposition 65 concerning coffee products[71]. - The appellate court affirmed the trial court's decision regarding the Proposition 65 lawsuit, concluding the matter in February 2023[73]. Cash Flow and Capital Expenditures - Cash flows from operating activities increased by $85.8 million to $294.8 million, primarily due to changes in working capital and higher net income[160]. - Cash flows used in investing activities were $111.7 million for the twenty-six weeks ended July 2, 2023, compared to $53.1 million for the same period in 2022, indicating a significant increase in capital expenditures[162]. - Capital expenditures are expected to be in the range of $190 - $210 million in 2023, primarily for new stores, remodels, and maintenance[164]. - Cash flows used in financing activities were $216.6 million for the twenty-six weeks ended July 2, 2023, compared to $112.1 million for the same period in 2022, with $148.3 million allocated for stock repurchases[165]. Other Financial Metrics - Return on Invested Capital (ROIC) improved to 13.0% for the fiscal period ended July 2, 2023, compared to 12.1% in the prior year[157]. - The Company’s performance obligations are satisfied upon the transfer of goods to customers at the point of sale, with revenue recognized at that time[35]. - The Company’s self-insurance liabilities require significant judgment, and actual claim settlements may differ from current provisions for loss[70]. - The company continues to face inflationary pressures, which may impact sales, gross profit margins, and comparable store sales[175]. - There have been no substantial changes to critical accounting estimates during the thirteen and twenty-six weeks ended July 2, 2023[180].

Sprouts Farmers Market, Inc. (NASDAQ:SFM) Q1 2023 Earnings Conference Call May 1, 2023 5:00 PM ET Company Participants Susannah Livingston - Vice President, Investor Relations and Treasurer Jack Sinclair - Chief Executive Officer Chip Molloy - Chief Financial Officer Conference Call Participants Mark Carden - UBS Ken Goldman - JPMorgan Edward Kelly - Wells Fargo Michael Montani - Evercore Rupesh Parikh - Oppenheimer Krisztina Katai - Deutsche Bank Leah Jordan - Goldman Sachs Karen Short - Credit Suisse Chuc ...

2.5% Continuing to Expand Customer Engagement; "Speaking" to more than 6M Customers Across Digital Platforms 9 Appendix Special Items 35,527 (1) - - 1,200 (2) 508 (3) Adjusted EBIT $ 137,049 $ 119,641 $ 113,235 $ 128,789 $ 80,064 The following table shows a reconciliation of EBIT and adjusted EBIT to net income, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share for the thirteen weeks ended April 2, 2023, April 3, 2022, Apr ...

Financial Performance - For the thirteen weeks ended April 2, 2023, net sales were $1,733.3 million, an increase of 5.6% from $1,641.2 million for the same period in 2022[88]. - Net sales for the thirteen weeks ended April 2, 2023, totaled $1.7 billion, an increase of $92.1 million, or 6%, compared to the same period in 2022[125]. - Comparable store sales growth was 3.1% for the thirteen weeks ended April 2, 2023, compared to 1.6% for the same period in 2022[124]. - Gross profit increased by $38.3 million, or 6%, to $650.1 million, with a gross margin of 37.5%, up from 37.3%[126]. - Selling, general and administrative expenses rose by $26.3 million, or 6%, totaling $486.2 million, representing 28.1% of net sales[127]. - Net income decreased by $12.1 million, or 14%, to $76.2 million, with a net income margin of 4.4%[134]. - Basic net income per share for the period was $0.73, down from $0.80 in the prior year, while diluted net income per share also decreased to $0.73 from $0.79[77]. Debt and Financing - The Company reported a long-term debt of $225 million as of April 2, 2023, down from $250 million as of January 1, 2023, reflecting a principal payment of $25 million during the period[54]. - The Company has a maximum total net leverage ratio requirement of 3.75 to 1.00 under its Credit Agreement, which it was in compliance with as of April 2, 2023[59]. - The Company capitalized debt issuance costs of $3.4 million related to its Credit Agreement, which are being amortized over the five-year term[45]. - The Company made no additional borrowings during the thirteen weeks ended April 2, 2023, maintaining a total outstanding debt of $225 million[54]. - Estimated interest payments on the Credit Agreement are approximately $42.7 million, with $12.8 million payable within 12 months[156]. - Each 100 basis point change in SOFR would result in a change in interest expense by $2.3 million annually based on the $225.0 million principal outstanding[165]. Shareholder Activities - The company repurchased 3,038,411 shares at an average price of $32.64, totaling $99.2 million during the thirteen weeks ended April 2, 2023[74]. - The company has a $600 million share repurchase program authorized, with $313.5 million available as of April 2, 2023[70]. - An additional 0.5 million shares were repurchased for $16.0 million after April 2, 2023[154]. Tax and Compliance - The effective tax rate decreased to 23.3% for the thirteen weeks ended April 2, 2023, compared to 24.3% for the same period in 2022, primarily due to increased excess tax benefits from share-based payment awards[61]. - The effective tax rate decreased to 23.3% from 24.3% due to increased excess tax benefits associated with share-based payment awards[132]. Store Operations and Growth - The company opened 8 new stores during the thirteen weeks ended April 2, 2023, bringing the total number of stores to 395, up from 379 at the end of the previous year[124]. - The company aims for at least 10% annual unit growth beginning in 2024, supported by its strategy of geographic store expansion and new store placement[118]. - The company closed 11 underperforming stores in February 2023, resulting in a charge of $27.8 million related to impairment of leasehold improvements and right-of-use assets[107]. Acquisitions and Goodwill - The company completed the acquisition of Ronald Cohn, Inc. on March 20, 2023, for a total consideration of $31.1 million, including $18.1 million in common shares and $13.0 million in cash[108]. - As of April 2, 2023, the company's goodwill balance increased to $381.8 million from $368.9 million at the beginning of the year, reflecting the acquisition activity[105]. Cash Flow and Capital Expenditures - Cash flows from operating activities increased by $26.8 million to $179.8 million, primarily due to higher net income adjusted for non-cash items[142]. - Cash flows used in investing activities were $60.1 million for the thirteen weeks ended April 2, 2023, compared to $27.2 million for the same period in 2022[144]. - Cash flows used in financing activities were $118.1 million for the thirteen weeks ended April 2, 2023, compared to $46.7 million for the same period in 2022[147]. - Capital expenditures are expected to be in the range of $210 - $230 million in 2023, primarily for new stores and remodels[146]. Other Financial Metrics - The Company’s restricted cash related to defined benefit plan forfeitures was approximately $1.9 million as of April 2, 2023[35]. - The company’s self-insurance liabilities require significant judgment, and actual claim settlements may differ from current provisions[66]. - The company is involved in ongoing litigation related to Proposition 65, but no loss contingency has been recorded as the outcome remains uncertain[69]. - Return on Invested Capital (ROIC) increased to 12.7% for the rolling four quarters ended April 2, 2023, compared to 12.2% for the same period in 2022[139]. - Total unrecognized compensation expense related to outstanding share-based awards was $40,794 as of April 2, 2023[103]. - Share-based compensation expense for the thirteen weeks ended April 2, 2023, was $3,852, a decrease from $4,456 for the same period in 2022[103]. - The balance of gift cards at the end of the period was $9.546 million, a decrease from $10.502 million at the same time last year, with revenue recognized from gift cards amounting to $2.582 million[33]. - The Company recognized a breakage revenue from gift cards that was not material in any period presented, indicating a stable percentage of unredeemed gift cards[33]. - The Company’s performance obligations are satisfied upon the transfer of goods to customers at the point of sale, with payment due at that time[33].

Sprouts Farmers Market, Inc. (NASDAQ:SFM) Q4 2022 Earnings Conference Call March 2, 2023 10:00 AM ET Company Participants Susannah Livingston – Vice President of Investor Relations and Treasury Jack Sinclair – Chief Executive Officer Chip Molloy – Chief Financial Officer Conference Call Participants Erica Eiler – Oppenheimer Mark Carden – UBS Karen Short – Credit Suisse Anders Myhre – Guggenheim Krisztina Katai – Deutsche Bank Ben Wood – BMO Capital Kendall Toscano – Bank of America Operator Good day, and t ...

2 • Opened 16 new stores, with 9 in the new format • Created 1,600 new jobs, promoted 24% of our team members, and filled 64% of store manager positions with internal candidates Comps (1) +2.9% Cash Generation $65M From Operations 5 • Increased sales of local produce by over 100% Q4 2022 Highlights Diluted EPS Growth 31% (1) Comparable Store Sales • Ecommerce grew 17% and remains elevated 2.5% 9.4% 10.8% 11.3% 2018 2019 2020 2021 2022 | --- | --- | |-----------------------------------|-------------| | | | | ...

Sprouts Farmers Market, Inc. (NASDAQ:SFM) Q3 2022 Earnings Conference Call November 8, 2022 5:00 PM ET Company Participants Susannah Livingston - VP, IR and Treasury Jack Sinclair - CEO Chip Molloy - CFO Conference Call Participants Michael Lasser - UBS Ken Goldman - JPMorgan Rupesh Parikh - Oppenheimer Chuck Cerankosky - Northcoast Research Spencer Hanus - Wolfe Research Robert Moskow - Credit Suisse Edward Kelly - Wells Fargo Kelly Bania - BMO Kendall Toscano - Bank of America Scott Mushkin - R5 Capital K ...

Sprouts Farmers Market, Inc. (NASDAQ:SFM) Q2 2022 Earnings Conference Call August 3, 2022 5:00 PM ET Company Participants Susannah Livingston - Vice President of Investor Relations & Treasury Jack Sinclair - Chief Executive Officer Chip Molloy - Chief Financial Officer Conference Call Participants Scott Mushkin - R5 Capital John Heinbockel - Guggenheim Kelly Bania - BMO Capital Ken Goldman - JPMorgan Edward Kelly - Wells Fargo Erica Eiler - Oppenheimer Krisztina Katai - Deutsche Bank Kendall Toscano - Bank ...