NGVC - Earnings call transcript Q4 2020 | Natural Grocers by Vitamin Cottage, Inc.

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Operator

Good day, ladies and gentlemen. Welcome to the Natural Grocers' Fourth Quarter and Fiscal Year 2020 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. turn over to Mr. like now the to conference I'd Natural and David President for Grocers. Colson, Vice Treasurer Mr. Colson, you may begin.

David Colson

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

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

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

the Kemper. Now, will over turn I call to

Kemper Isely

you, growth. XXXX net Thank sales many diluted in $X including in afternoon opportunities over for $X.XX you and average Fiscal resulted and challenges We XXth Thank store fiscal us comparable achieving everyone. today. year earnings our of our a joining per consecutive record faced response billion in was performance, and in share. XXXX sales and David good also positive daily

XX%. was comp quarter up XX.X% comp and fourth was fiscal Our full the year

October. continued trends comp strong through have Our

XX.X% during year. the the with for our fiscal significant sales growth realized During the expansion fiscal momentum, year XXXX, by EBITDA quarter full the to fourth XX.X% to performance also we strong year adjusted and in improvement margin store growth continued efforts. Supported enhance with we

declaring dividend quarterly unprecedented to was shareholders. our position, commitment that dividend Fiscal to of of strong value our an common per cash pleased we and year, cash our challenges share related special global common amid financial and $X.XX reflects a are dividend We the presenting mandates. share. return our cash pandemic business performance, in addition to announce numerous special to per XXXX The $X flow, government are

very We performance. and of our response are proud strong

entire and toughest delivering to operating successfully while We quickly and founding true navigated challenges, of quality, staying our customers. Our the our natural the to principles. environments, family Grocers to through organic highest Natural adapted these valued while foods

strong results ability reflect full to and and the our competencies both quarter core fourth our Our in leverage values. year

Our emphasis nutrition differentiator on customers long-standing environment focus on given an where and focused on the their choices, important are including immune strengthening and an health informed health current system. is on-trend making

coupled offerings, quality Our with value environment. our in proposition is uncertain economic relevant affordable always very today's

in cleanliness customer safety products, our growth. measures Additionally, and store confidence driving are our

focus Our values, customer and our and convenient by A ever. offering supported organic exceptional differentiated and shared home includes; healthy free produce. alignment relevant than at providing XXX% A model communities standards providing on today strong on store customers service. that and for industry-leading a with recipes cooking bulk education, prepackaged layout ingredients offering focus nutrition science-based more quality only is

supporting and commitment highlighted extended year three-day offers, a which harvest this with special was free This pesticides. beyond sale was event to marketing August, and highly on focused of to a sales products In recent farming month drive grilling a continue initiatives, we XXth of exciting interest which successful organic customer Sweepstakes, our and healthy to highlight me Let facilitate our that month, ingredients. techniques excitement our art with celebrated promotional burgering anniversary national our July, utilizing September, social distancing. a a In organic to and and contributed the promoted few In organic featured promotions. anniversary activities fundraiser event, our to we performance. strong we event

loyalty ability in reached and fourth represented X.X drive NPower Our of to customer NPower to has to sales our market customer and program enhance XX% loyalty customers the base. now contribute our million quarter. growth, continues membership to

they a Additionally, under for to promotion feature so and economic family for our brand promotion our can affordable, high-quality timely follow, educates to $XX well has in $XX ongoing families family cook been both This and offer of even Natural feeding the Grocers' aimed meals which products. received. We times. featuring ingredients is challenging initiative, recipes many family highlights four a and at

We are seeing Grocers' of growth Natural brand continued our products.

SKUs In the private total year-end. private Natural SKUs, the same bringing prior sales XXXX, our total of XX X,XXX to quarter, compared grown offerings period year. brand sales at to We including represented over our Grocers number have and the prepackaged supplements during fourth of of X.X% brand bulk fiscal by products X.X% in

developed Our and with sourced, have affordable values consistent premium been at products our private brand as positioned a an quality are and price. core brand always

brand by adoption we be category our We come. Grocers' encouraged with of our penetration to to has many our the years the potential growth In communities continue significant believe ways. to in Natural branded support rates. We XXXX, continue products strong in

customers we focused causes quarter, raised raising approximately included and for XXX,XXX many pesticides. raised and charitable over September, ongoing XXX $XXX, on to $XXX,XXX Organic partnered in banks, During Harvest neighborhood local beyond addition over pesticides our purposes. parks. important reduce donating partnership our honor fourth Grocers the to to in for Natural to our commitment National neighborhoods In food. food Ladybug launched These efforts with your of and month In Love,

to how recent ensure world choices efforts is of rooted benefit environmental brand just operations we the and believe reflect we have of are before, work part impact to discussed Grocers, we we our chain make Natural As supply values. in these At hard and all social a stores, history tomorrow, a small deeply Natural Grocers these today directly and sustainable leadership the stakeholders.

for to our and customers, committed sustainable communities. a are We goodXu our our building future broader healthy crew

measures for to We've our safety to implementing goodXu been crew. our commitment would proactive during focused I like pandemic, Lastly, the highlight on crew throughout our XXXX.

hourly implemented in permanent was supporting $X We crew March wage for through our we and which bonuses throughout XXXX, discretionary increase paid periodic are our a have crew, pandemic. hour the per

was expense the of fourth $X.X in quarter, Our income. enhancements of of net and million wage which the quarterly bonus represented equivalent incremental XX% approximately

the With the am guidance. value the every at products discuss or income. I member were me and affordable natural to organic call quality fiscal let our prices. year, approximately to and helping enhancements drive want XX% For thank turn over that, always growth to of $XX.X each the to continue closing, all ability results in to net confident stakeholders. and their for commitment of Todd financial In our XXXX highest full for pay crew deliver million I us to and our

Todd Dissinger

afternoon, and good you, everyone. Thank Kemper,

As fourth amid and mentioned, outstanding environment. we an fiscal had Kemper year operating quarter a challenging

communities X%. in with transaction produce, outperformed frequent offset average comp. trend increase of results an of the a store sales X.X% increasing strong by frozen, in we Supplements continuation reflecting XX.X% practice comp well XX.X%. financial our a Our categories quarter commitment size. company fourth to serve. reflect a goodXu count, Net as the increased customers during distancing. and decrease size partially transaction average sales Meat, performed of fourth $XXX.X daily million, was average social customers XX.X% bulk less shopping and The crew the dairy quarter was by quarter the increase This comp the to with comparable our transaction fourth trips daily driven average also of

of partner, penetration although quarter. through continued saw we to the moderated volume Instacart, and compared online delivery our sales third Additionally,

as I attributable higher was stocks a quarter We which seen the XX.X%, the quarter our X% of approximately quarter. of in to Gross primarily vendor the result an that partners modest margin prior as during improvement see improvement continue the margin note in to to compared in inflation, was to out profit reduced the margin also was fourth like gross continue adapt to promotions. period. fourth would have environment. fourth product The year during XX% over XXXX we to

a of sales increase lower as expenses, a improvement The marketing which in-store as percentage occupancy by partially negatively during adoption of all expenses, year-over-year of sales. accounting of the new expense to quarter and the percentage depreciation The offset shrink attributable and the partially increased in-store XX% and were shrink the expenses, labor-related were period. The margin all impacted a increased hourly percentage year our which in sales. gross increase saw to We leverage and offset March fourth increase Store wages, sales hourly permanent as in leverage by occupancy $X margin, expense a compared XX improvements points. product to labor-related also prior driven was to was by lease approximately by a which of in XX.X% discretionary expenses as bonuses implemented expenses standard, basis crew. was periodic percentage in

of fourth Adjusted $X.XX share in per to net pandemic. support $X.XX quarter, $XX.X Additionally, diluted mandates we operational earnings income quarter or of store was $XX.X related up This fourth the in EBITDA was $X.X with earnings diluted million compares quarter operating the fourth to hours million labor quarter. with requirements million the government in with per comply $X.X the of to are to income Net share XX.X% of to increased fourth compared of year. last in year. million last the

equivalents generated strong million operations of Capital was the net invested capital fiscal relocation with million. Free during cash and $XX.X debt. a included flow in full $XX.X expenditures in For year fiscal expenditures. million finished $XX.X cash XXXX, six $XX.X no position We the cash and stores opening from new in we the year. of one and and cash million liquidity

As under of year-end, we million available facility. our $XX credit revolving $XX.X had million

facility term our financial a have lender $XX million we existing loan our support flexibility Additionally, special from secured and dividend. provide to

environment. and and operating sheet remains positions an face balance strong liquidity us Our uncertain to

of cash has total share of $XX per As million a Directors Board Kemper of the declared special common aggregate. in noted, or $X our approximately a dividend

common of XX, cash of XX, will Our all business XXXX, on at dividends $X.XX to XXXX. on dividend record December a share. November of declared has also shareholders per Board Both be the payable quarterly close

shareholders. opportunity and our new cash term the maintain special preserves value flow, provides our To to maximize $XX will new flexibility. use capital million strong revolver on the loan as facility loan our return we financial Given availability and dividend the to well for cash term cash as an modest dividend, position The hand fund facility. leverage,

We profitable and a growth continued anticipate to favorable expect investing continue initiatives in of cash flow. trend

fiscal to I XXXX Now, introduce would company's outlook. the like

current rapidly Our environment the related of light trends in COVID-XX government mandates. guidance and evolving reflects

government related the and operations factors financial and will the through mandates. While of continue cannot impact XXXX. The duration severity the or our fiscal to these predict performance expects company pandemic company

five for achieved capital range sales the of to and For stores, $X.XX fiscal and $XX expect fiscal we XXXX, X%, diluted per to between negative we relocate X% achieve three earnings to stores, $X.XX, million store six the open million. expenditures and to in five daily comparable of average new expect year share between growth $XX

consistent is years store Our current new and over growth the several recent for trends. XXXX with expectation in next

our Our will the reflects of XXXX of XXXX. first outlook comps trend quarter March, In in will we COVID-XX second quarter expectation consistent anniversary January with and February the remain and the pandemic. the in in that the of quarter, start the comp fourth

recall, year had and of as through our of fiscal margins our then in second a a increases XXXX. year, will anniversary and values we the anticipate expenses we comp March year-over-year second as the our of principles half first sales of our of store XXXX. dedication we record-setting you higher flat. We the be quarter, anticipate over crew. higher In second closing, level higher will the of the in the to As year. fiscal labor-related second half off slightly as roughly expenses commitment and XX% We strong In of the half gross result be attribute to was percentage in to year-over-year half will and margins implemented anticipate in comp we flat that a the

like outlook up We in lines for you. are would questions. the I Thank With confident for to that, open our XXXX.

Operator

Thank you.

comes Instructions] question will now go Greg Research. Wolfe with Please Badishkanian from session. ahead. the [Operator begin We question-and-answer Our first

Spencer Hanus

quarter, Good a Greg. is afternoon. guys. for on This Hanus Congrats Spencer on nice

Todd Dissinger

Thank you.

Spencer Hanus

signs up I my quantify of currently? the seeing are again of weakness chain country? are rises the cases? any consumer's what rising comp virus And you shown then, the you to given running parts So, guess question supply in quarter those date. you're stocking Can on And was has trends any signs the that the just as seeing of

Kemper Isely

to currently, trends running are four. comp they ran quarter Well, similar in how

over seen improvement actually since chain, about supply the haven't in May. as we've far stock supply essentially – in As seen chain every month, we

but year. they when people not they to As far as when up, the slightly, – stocking up how – compared stocking March in are of significantly did this

Spencer Hanus

to saw XXXX gross that That's benefits how we during XXXX, saw expect XQ? you we gross can components stick really margin that to you about should expansion And helpful. as next in And year? you talk look the of the much then the margin of

Todd Dissinger

Spencer. you, Thank

Most promotional we of XXXX the a then been then on first by March first of see vendors. of how we when margins the probably to activity -- promotional expect drivers margins has that would through about because where be And half into hit XXXX. of continuing activity. have expect we off. the half March And to We flat should We down year, basis was. similar the a supported less the half. year-over-year March would second strong to So, would were QX on level year-over-year been And elevated the see basis. in be of

Spencer Hanus

the of how do what e-commerce little sales next that that Okay. you sales And slowed represents you think And today? on bit channel? will Can be Instacart. you about e-commerce think those year sales sticky a talk I percent in mentioned

Kemper Isely

Sure, Spencer.

give exact that out our seen Instacart company compare like of that don't It prior in data in quarter. a the said, than QX. I moderate on versus And a we've our QX represents to bit couple the year, we less X% sales fourth So, would percent and total sales. little

long-term So, opting challenging, sticky will customers it's to how that will some the is environment be delivery. while Certainly, be. say hard for COVID there

Spencer Hanus

the final growth. just unit one then And on is

an unit calls X% new think past. next guidance you've acceleration growth that in think for you less you And new there'll in six I run here? stores in than is your are the less you've the growth about be how thinking year, do to units? years five that some When which growth than

Kemper Isely

we next this us we units that our sure sites growth premium on make that the and to We anticipate accelerating don't that growing excellence year. and in to new is giving stores. moderated at so that Right five think we keep pick is moment, can growth that helpful beyond we planning prudent six operational our we're can on

Spencer Hanus

you Thank guys. Great.

Kemper Isely

Thank you.

Todd Dissinger

Thanks.

Operator

no question-and-answer any to further closing for [Operator over turn Instructions] would showing I concludes to like I'm session. Isely back our questions. the conference remarks. This Kemper

Kemper Isely

with call a you very XX-year Good to to quarter remain first Thank our based We review XXXX our much day. forward results. Please confident and our discuss speaking and joining you look great stay history. upon results. quarter fourth in Thanks. on bye. business next for to us have our healthy We safe our

Operator

presentation. Thank today's has conference The concluded. attending now you for

You may now disconnect.

Natural Grocers by Vitamin Cottage (NGVC) 19 Nov 202020 Q4 Earnings call transcript