NGVC - Earnings call transcript Q4 2018 | Natural Grocers by Vitamin Cottage, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Natural Grocers Fourth Quarter Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

As a reminder, today's call is being recorded. And now, I would like to turn the conference over to Mr. and Natural President Vice Colson, Treasurer Grocers. for David Mr. presentation. you may your begin Colson,

David Colson

fiscal conference thank Good Vitamin Grocers and Natural afternoon, Cottage XXXX you quarter joining everyone, and for us call. for the fourth year earnings by

On and Officer. Dissinger, Co-President; Kemper Todd with the Chief me call are Isely, today Financial

risks Today's call, are current forward-looking forward-looking variety including uncertainties. on As the forward-looking statements. release described and a Web factors, conference statements The reminder, at subject expectations company's of and available differ is site statements in are the company's those XX-K. of website a recording made statements than the and be most investors.naturalgrocers.com. all statements. recently on and statements All company will that assumptions undertakes of historical to this based could to this press from risks Forms on obligation call XX-Q results on other the fact to available filed Actual no a detailed due forward-looking are materially the in update

turn I Kemper. over call Now, to the will

Kemper Isely

good everyone. Thank a and solid finish and to XXXX. results of afternoon you David, It another quarter pleasure is strong fiscal to review you, with my the

months hard past over We competitive have worked very the XX to to challenges the XX address environment. a of

comps and comps With We control sales. consecutive sixth our daily up another gross of quarter comparable X.X%. to of store margin are quarter and report pleased investment, X.X% improved sales expense mature average stabilized positive up trends store

average comparable fifteen we For growth. the daily years comp consecutive year of reported growth X.X% sales positive over XXXX, fiscal full store marking

sales metrics. with favorable and pricing improved impact our traffic XXXX, on strategy promotional fiscal basket begin had we and a trends our As

impacted promotional margins. these However, negatively efforts

success gross our we our As our comparison promotional to momentum. margin past on values. were while year-over-year a strategies year to core the Fundamental commitment our the to maintaining to moderate this sales was their impact positive year adjust progressed, able

pricing. affordable industry-leading promotions standards Our in our emphasized

Our offers the efforts of message supported our promotional differentiation marketing pricing from and competition. to aspect continued clear and the standards our

would during fiscal XXXX. highlight like of Now our to some I briefly other accomplishments

During We introduced Grocers new planned fiscal have XXXX. fiscal brand and XX brand XXXX, Natural launch Grocers to Natural products plus significantly our we offerings. in expanded XX products

Our been our as a initiated campaign are at a developed have on private brand we brand value September, an focused products and with quality price. core private consistent our premium In positioned offer. expanded affordable brand marketing

to approximately with representing resonate Our the continues customers. year members with We NPower XX%. XXX,XXX customer of growth year-over-year loyalty ended program our a

represented During of fourth quarter sales. members XX% our NPower the

the is effective promotional directed leveraged to have NPower overall an price NPower program We as marketing helping program, the our to while traffic which moderating our customer and many investment. drive tool activities of

Our marketing fiscal significant XXXX. accomplishments team in several had

Earth Day our strong participation. events and Day customer monthly Anniversary such Our as store enjoyed

social store media, effective. local been outdoor digital targeted marketing, effort Our advertising all TV, and have and direct mail

in our functionality relaunched September, with refreshed a an Additionally, Web and was appearance. site enhanced

development operational team made and all of stores. excellence over major past our throughout store training leadership operations in year Our executing the strides

X our and store fiscal both We shrink labor progress stores and opened XXXX fiscal During in X new performance. stores are we and new relocated our with saw metrics. pleased XXXX during

average their double-digit year. rate on first realizing are growth relocations Our in

grow opportunity past new sales at fiscal we the improvements year. generate rate realized add forward to existing stores We stores, to that flow. the cash look we us execute remain allow the focused delivered continue formula on the that As and positive a will to XXXX we presents our plan to will over

focusing me improvement. results. our will and to call to to With discuss on profit We financial in awareness strategically let pricing, that, Todd over while continue invest drive the and marketing turn promotion to traffic continued

Todd Dissinger

everyone. very you Kemper much afternoon good and Thank

mix to average comp Gross our higher The investment promotional focused and acceleration sales fiscal gross promotion decreased has our comp fourth the the of in primarily during sequential sales comp been level drive and gains that as our comp compared driven in X.X% of third prior quarter comp percentage expenses The a a XX impacted grocery approximately from gross X.X% stacked continuation as when gross in million the percent comparable year-over-year average Product decrease relocation expenses in increase more supplements XX fiscal from no and was by include fourth and expenses pricing our comp fourth costs. have one continue the strong the points one point basis basis and driven quarters more and leverage charges Store the as than the comp. than store by during and in store of the a a X.X% in store sales basis quarter to our a two-year $XXX,XXX and mix was points store decline year both period. size. the the traffic reflects approximately in in increased and fourth by the profit fourth quarter sales impairment margin increase the margin margin, relocated by body primarily to X.X% quarters. the count $XXX.X year sales pricing improvement initiatives. one has store sequentially. to trends over the increased to past growth. closing quarter expenses period store experienced offset and daily fourth by The new margin and declined basis XXXX. decline generate by in on points Kemper margin XXXX, have increase increased compared which gross During of opened strong stores of is Pre-opening X.X%. daily to maintaining fourth quarter quarter's in quarter. compared expenses point ability margin operating The retain quarter impacted was fiscal approximately grocery, XXXX. continued our grocery $XXX,XXX rate in The on Note of approximately to our XXX margin. a XXXX while Recall store of We and XX improving margin we administrative the the in fiscal average efforts XX year-over-year. seen mentioned first gross sales that given on transaction during relocation thus the The and two transaction care XX.X%. basket we the basis opening The sales prior and stabilize the to net of quarter and evidenced decline and we a new trend to sales lower leading moderated XX.X% to of leverage

share the fourth XXXX to and deferred tax tax compared per in $X.X quarter tax reconciliation federal the to cents income rate reform rate related XX.X% the of in income fourth XXXX three which earnings decrease effective effective taxes September of assets compares to to is for income quarter with companies the end and year month income of the the the year. fiscal million fiscal of diluted for $X.XX fiscal adjustments XX, state and the fiscal Net Our of fourth the was tax of last period XXXX, in The fourth increased quarter ended in quarter X.X% $X.XX liabilities. for XX.X% federal recent XXXX. of result

of million to fiscal fourth closing which million costs, mentioned up of benefit quarter $XX.X Adjusted by impacted $XX.X offset of $XXX,XXX approximate an and rate the $X.XX XXXX. approximately of fiscal from charges non-recurring reported I noted, of and compared forecasted I the impairment EPS were As charges ago. XXXX Adjusted lower income by in impact store in during the was was than a excludes X.X% quarter. store moment impairment fourth tax quarter the the closing $X.XX EBITDA EBITDA

XXXX, $XX.X in from million During operations of generated we and $XX.X fiscal expenditures. cash capital million invested

the growth, outstanding $XX our facility supporting revolving XXXX. on during to balance credit store million addition by new our In reduced fiscal we

Now, I Kemper and the to call will turn development discuss guidance. to unit back

Kemper Isely

Todd. you, Thank

one far of first During relocated thus during and XXXX. store new one the opened we fourth the store quarter fiscal quarter

store. currently new store signed to in We have for and one closed stores additional have leases five one open We XXXX fiscal relocated two beyond. new opened and stores,

targeted and with new monitor store our to openings. continue We performance store remain comfortable

XXXX let Now introduce outlook. me our

X $XX to X XXXX, X.X% growth achieved net achieve $X.XX. stores fiscal diluted and X% income to to of million. of to expect million X%, we And X%, stores, X expenditures open store During of growth resulting X of earnings for achieved X.X% X.XX% capital unit relocate between of new in in to to margin $XX daily to range sales per we the average $X.XX the fiscal comparable XXXX expect share

profitability quality margin value and and investment progress are are very in fiscal the for standard, XXXX customers while value. affordable our leader nutrition encouraged enhancing our growth prices in our believe by moderating We education. and create in market we incremental we by shareholder driving traffic We

to with well-informed the customers Our a accessible provide and shopping be stores nutritional our and tailored convenient trained crew of are highly value our products. members about friendly, to our are experience

unrivaled affordable We with and quality, and our education Crew. our communications will pricing and our on to product standard focus continue commitment to always nutrition a community goodXu

you. to like questions. for I'd open lines Now, up Thank the

Operator

And Please answer be will the Kras question session. Instructions] Sean begin And we and Barclays. now you. questioner today's ahead. will first Thank go with [Operator

Sean Kras

of you of much. very to guidance, through would low-end can that you our the question. the high-end walk you On the range? you some taking And Thank get us versus the appreciate factors

Kemper Isely

I have question. Todd think I'll answer that

Sean Kras

Sure.

Todd Dissinger

the non-recurring Thanks New guess assets that at we the as of EPS set off the XXXX, than that's starting remeasurement $X.XX $X.XX. XXXX our first really less Year the Sean. had liabilities. deferred for $X.XX with tax I level we and And of look of

So mid-range of XXXX starts guidance. the our about

end X% course are of expenses percent that sales. of and we expenses as be a flat anticipating would margin, at flat and administrative year-over-year On high the the guidance, of operating gross comp store our

costs, leverage no the and some pressures labor increases, no Denver minimum market. in to higher Colorado So wage leverage there's and labor attributed

support but on comp range to low-end, So that the X% we're additional prepared investment price if necessary. the

we so pressures some and slight deterioration also store labor some And expenses. have higher in margin

Sean Kras

acceleration helpful. question first with you the difficult quarter throughout far a comparison. the comps. had the Can how you. I the into Thank more a quarter? quarter the That's trending even just so was cadence on maybe talk obviously very There nice is business about this and

Kemper Isely

the pretty a pretty September strongest always month. we're -- during same every every I was -- same month, the they comps mean was much but On were bit month the there little much

where the in end little far bit at quarter this were we’re last. down a So from of we

Sean Kras

the then Okay. you're on more doing just looking. spending for be on from discuss would thoughts also things two, members. to you great how Thank one and these are your trends to some get a just And those NPower out reaching maybe marketing can members And between me, if the it just of non-members perspective you.

Kemper Isely

more per that significantly more significantly spend That particular non-members. members question. than visit and answers NPower about does the Well, it often

to to that just as we've the So that week we members seems way we we traction blast times every getting a sometimes increased with week members. promotion used cetera. about our increase with to X communication our our members NPower the that recipes the market week and two market per email And various a email to with be and of of it lot et frequency to

Sean Kras

you. That's great. Thank

Operator

will Research. Mushkin questioner be Please go today next The ahead. Wolf with Scott

Scot Mushkin

Thanks taking my questions. guys. Hey, for

a or on little kind a slowed So because of down. have being growth. it's to comp, you part no just guess over X just obviously strong, think to on guiding thought X are tough year-over-year, you're flat wanted give I focus to there's fairly if the just things but talked don't of me of about EPS [indiscernible] leads so about kind want very a that process so bit Can I it, more. a that conservative just guidance to We investment Is I you guide? and that it,

to just something say, So your in or have to come will be flat. conservative guys EPS there you been believe that is I'm will overly there comps and trying you leading

Kemper Isely

in with the be and all that we that economic it's Well, the uncertainties all beginning year and somewhat be to think market the conservative are right in your at now. realistic the the better of out comp guidance

Scott Mushkin

had then, as And around of mean and What you we've in through. would you're getting you I you the conservatism? -- different, on certain bit what part right more are competition, competitive. seeing are of just bit seen comment guess Okay. on that? differently a a a it's second we're is be the market. categories how are in market guys feeling things, going companies deflation That real I couple mean gone that traditional obviously the we've operate little is customers in the seeing the but side my has competition up that, that little I ramped question your of as

Kemper Isely

any feel competition for our war -- always than successful time don't business it at has grocery not fighting really better customers we've and the a have ever been and business. differentiating feel been like has why intense we're why we've I gotten since pretty The different. know we don't in really No. ourselves a been and and letting we're long more been

Scott Mushkin

if for size you labor or the the think weighted gross risks guys risks. thing you equally going at to look you about year, next be one be me, last to The when cost number about margin are one that or those two would

Kemper Isely

coming risk particularly say number extremely here the will labor year. in Colorado, labor inflationary I tight, for in one it’s this The are cost markets is probably wages.

Scott Mushkin

my for thanks and right, questions. Nice All quarter guys. taking

Kemper Isely

Thanks.

Operator

ahead. Shiyao Ling RBC Capital go And [Operator Please be with questioner the will Markets. Instructions] today next

Shiyao Ling

Hi. It existing like best your point is or that aimed to taking a to way on growth? strategy Thank for my much frequency. Bill the the changes and Is increasing sounds it so style there at more profitable new is question. generate customer I'm you to promotional Kirk. current attract try when their for customers

Kemper Isely

not And customers can now most from on have spend that customers about targeted to you prospective a to our et as customers. marketing XX $XXX,XXX effective is very a spent comp XX spend. growth attract of also than $XXX,XXX increased new we cetera billboard been and more to tool then increased new attract do most about our on existing numbers, of postcard new to very We're [indiscernible] month. We've customers stores get And we mailing year, times home month of been marketing ways. every to in our that's new came to about used from our customers. that what that's in see out No. customers. of spending we to last a of And right Actually and dollars attract our from effective number

Shiyao Ling

from Thank comment impact you. question other is, relocation. your And $X.XX my the around

So for that $X.XX negative have been is quarter impact? impact that one-time EPS a so ex it and would the on

Todd Dissinger

I costs represented a had clarify and tax forecasted And lower items that impairment rate. unusual think closing To two we was than we by $X.XX. had $X.XX about -- store then in about at offset QX, that costs choice

year look the other the difference of [Technical for then been of So tax and the the other have liabilities. we kind assets only our remeasurement $X.XX for Difficulty] would -- the only and

Shiyao Ling

Got so it. Thank you much that's all have. I

Kemper Isely

you. Thank

Todd Dissinger

you. Thank

Operator

Okay. this remarks. will Instructions] And I at look there question-and-answer like to back our Kemper further [Operator now no Isely conference any this to the turn so over conclude questions for closing to time, session. be would

Kemper Isely

fourth much forward our a our Thank you for Bye. quarter Have with look XXXX to you year We results. to quarter very results. great XXXX next review and on discuss joining speaking to call day. our fiscal us first

Operator

disconnect your you conference now may The today's now Thank lines. for attending concluded. and you presentation has

Natural Grocers by Vitamin Cottage (NGVC) 15 Nov 182018 Q4 Earnings call transcript