Sprouts Farmers Market 2015 Annual Report Download - page 57

49
Since inception, we have financed our operations primarily through cash generated from our
operations, sales of our equity and borrowings under our credit facilities. Our primary uses of cash are for
purchases of inventory, operating expenses, capital expenditures primarily for opening new stores,
remodels and maintenance capital expenditures, and debt service. In 2015, we generated $239.9 million
in operating cash flows and ended 2015 with $136.1 million of cash and cash equivalents. We believe
that our existing cash and cash equivalents, and cash anticipated to be generated by operations will be
sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital
requirements will depend on many factors, including new store openings, remodel and maintenance
capital expenditures at existing stores, store initiatives and other corporate capital expenditures and
activities. Our cash and cash equivalents position benefits from the fact that we generally collect cash
from sales to customers the same day or, in the case of credit or debit card transactions, within days from
the related sale. In the event that additional financing is required from outside sources, we may not be
able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when
desired, our business, results of operations and financial condition would be adversely affected.
Operating Activities
Net cash provided by operating activities increased $58.7 million to $239.9 million for 2015
compared to $181.2 million for 2014. The increase in 2015 includes the impact of stores opened since
2014 and the effect of the 53rd week. In addition to the increase in the number of stores we operate, we
leveraged occupancy, buying, utilities and fixed direct store expenses with comparable store sales
growth. We also experienced a decrease in interest expense due to reductions in balances from a payoff
of our $257.8 million former term loan and from the total of $100.0 million principal payments on our
current Credit Facility.
Net cash provided by operating activities increased $20.6 million to $181.2 million for 2014
compared to $160.6 million for 2013. The increase in 2014 includes the impact of stores opened since
2013. In addition to the increase in the number of stores we operate, we leveraged occupancy, buying,
utilities and fixed direct store expenses with comparable store sales growth. We also experienced a
decrease in interest expense due to reductions in debt balances from a payoff made with IPO proceeds
and other voluntary repayments and lower interest rate, including a 0.5% lower rate due to our IPO.
Investing Activities
Net cash used in investing activities was $128.3 million for 2015 compared to $126.7 million for
2014. The increase in cash used for investing activities is primarily related to the purchase of four leases
from the bankruptcy auction for Haggen stores.
Net cash used in investing activities was $126.7 million for 2014 compared to $86.3 million for 2013.
The increase in cash used for investing activities is primarily related to timing of payments on capital
expenditures for new store openings, store remodels and maintenance capital expenditures.
Capital expenditures consist primarily of investments in new stores, including leasehold
improvements and store equipment, annual maintenance capital expenditures to maintain the
appearance of our stores, sales enhancing initiatives and other corporate investments.
We expect capital expenditures of approximately $145 to $155 million in fiscal 2016, net of
estimated landlord tenant improvement allowances, primarily to fund investments in new stores,
remodels, maintenance capital expenditures and corporate capital expenditures. We expect to fund our
capital expenditures with cash on hand, cash generated from operating activities and, if required,
borrowings under our Credit Facility.