NGVC - Earnings call 3 2021 | Natural Grocers by Vitamin Cottage, Inc.

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Operator

Good day, ladies and gentlemen. Welcome to the Natural Grocers Third Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. [Operator Instructions] I'd now like to turn the conference over to Ms. [ Jessica Teeson ], Assistant Treasurer for Natural Grocers. Ms. may you ], Teeson begin. [

Unknown Executive

thank Good the XXXX joining for for Grocers afternoon, Earnings by Call. Year and Natural Fiscal Vitamin us Quarter you Cottage Conference Third

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

a information and those statements As expectations results conference uncertainties call on and could of uncertainties. described Actual are forward-looking subject variety differ during are a forms provided to company's the this from statements XX-Q in including forward-looking the risks due in reminder, XX-K. detailed based and most materially certain assumptions filed current factors, recently to and risks and the

this obligation on available on call The no to company available forward-looking the website release the at statements. undertakes and Today's investors.naturalgrocers.com. website, is of will press company's be update recording a

will I Now Kemper. to the over turn call

Kemper Isely

sales Thank Thank for expectations. performance the afternoon, third you quarter, another continuing year-over-year joining comparisons. us saw improve you, good our strong Jessica, We delivered to face in trends and exceeding difficult sequentially, while everyone. today. We

engagement on and continues always well our organic as prices resource products being focus levels delivering natural a affordable high of science-based drive customers. as nutritional the to for education at Our with highest-quality

X.X% positive positive third inflection return the was creating in the the to basis, quarter, as from X-year to to basket transaction third third earnings down few a highlight accelerated increase in I comp comparable that quarter store balance of First, count patterns. X.X% up transaction comp new like quarter in while would began for second quarter. remained On key noted our through the performance of the On average pre-pandemic from customers year. Transaction stacked Daily count for a third the with quarter, the comp turned to comp had a April. we against size XX% store quarter XX.X% X.X% second XX.X% a metrics the count in third last sales comparable average point the quarter, daily sales quarter. up call, were down

margin quarter, The basket third quarter income of expectations points results. XX of by last on of remained level, gross $X.XX pre-pandemic earnings of third initiatives as up share expenses expansion. the lower to XXXX, to the compared key Operating which per as the And were store increased elevated our to driven basis has over by compared quarter the We above quarter higher compared contributed positive of XX% the year. several third was in X.X% third XXXX. than and our to and focused

During the and quarter, Texas. Colorado stores the process year new to we were delays Midland, stores the conditions per Pueblo, relocating as communities between excited to We equipment deliveries. to return to and improve. in experiencing intend challenging this and Opening opening year open construction due been relocated stores we X are has new and in stores of these X

year ago promotional the a X% The loyalty customer X.X members, program and for tool ended driving important up with engagement. We million remains up XX% {N}power over activity optimizing third {N}power and quarter an versus sequentially.

the quarter. was the from sales net up and third XX% penetration for ago to slightly in {N}power year a second compared Our XX% quarter

formulas. the that a began of our we in portfolio Natural relaunch include brand The strengthen and March to continued versus in quarter, of Grocers of of range XXX third vitamins, grew products, third the herbs, to precision differentiation a During competitors. comprehensive quarter our brand point minerals our private over key supplements

from practices made supplements good ingredients, affordably and branded are Our certified are priced. high-quality manufacturing

plan the to coming at over we the initial the the We Additional completion years. branded have supplements approximately and rollout. SKUs number SKUs are under to expand expect further of of development, XXX

and vegetables our supplements, brand XX olives added liquid dish we to to products new including addition soap. In and assortment, jarred

For of the sales rate the X.X%. products Natural quarter, brand Grocers our was penetration

hydroponic, produce individual to fresh, are which GardenBox, excited brings launch also highlight the very recent store to our location. of organic We

of We starting are at piloting assortment Colorado, priced per $X.XX this program head. at our lettuces store in Green an Mountain with Lakewood,

outside, shipping container. of every process, and looks regular Inside, light GardenBox water, nutrition. nutrients optimize aspect like the innovative On a controls to and the growth temperature, including growing technology the

of crew. our supporting our One goodXu core and values communities is

experienced our providing This Fund. in During XXX(c)(X) financial the the our entity, assistance in crew National Aprons and quarter, we grants to charity partners direct to charitable community. is Natural a who launched Heroes unanticipated fund hardships, both Grocers' Grocers

to oversee We are and support communities. of excited our and proud providing established a to crew legacy fund our to have

while hard I like crew on and With goodXu principles. are commitment. goals me founding call turn our delivering the They Todd results our financial let guidance. Finally, key staying thank that, work to to to true would over continued our for the discuss to and to our their

Todd Dissinger

and Thank Kemper, you, good afternoon, everyone.

initiatives Our sales strong as well third as impact our in expectations, store-level with quarter the were execution. of reflecting line our

the million period. X.X% were third the of Daily a prior in the fiscal $XXX.X a in we the Net average X.X% year of quarter XX.X% quarter improved from On down quarter. XXXX. decreased comp basis, sales third sequential store increase comparable sales cycled from second negative as X% a

comp X.X% the XX.X% product supplements those bulk represents noting cycled Meat, quarter a basis. which trend strong third a a in worth Our an were the stacked its on the all categories stacked exceptional comp continued a performing business on strong X-year and basis. major X-year weakest dairy with comp our categories performance that in demand year. last as categories is had of quarter, third It

core single remained from we quarters. Inflation trend reflect of rate slightly during to via brick-and-mortar our and the quarter, customers adoption in percentage The a of previous the pricing. our the sales visit per as range of importance experience in-store down many our along stores X% sales multiple as to customers week. delivery third in pass which our continue to X% times low remained the were grocery digits and Our net

On improvement primarily driven favorable product quarter. expense, was contributed basis increase shrink in product by higher shift a The margin to strong deleverage a and stacked points. the offset expenses. lower XXX a by sales We partially in point now gross third occupancy margin margin Transitioning XX mix. The basis a increased during of drove basis, supplement X-year margin expense. to comp gross

store sales. the sales per to net flat in basis $X.XX in of expenses sales period. were Store quarter net relative year. quarter, increase were on primary income by of the expenses points share quarter, compared a consistent normalized the On third basis Net the third despite a we million in expenses lower marginally the quarter, third XX.X% basis, to XX to sequential share with prior diluted margin last the year factors Labor-related store $X.XX diluted the second per lower gross in leveraged expenses income compared in million the or share. and Lower of $X the earnings per or improvement behind $X.X volume.

EPS expectations. our ahead was Third of quarter

million $XX.X third in was EBITDA the quarter.

XXXX, of $XX.X unchanged During from million X net year increase X of third months operations in net stores a cash the at We first stores in million store capital we the relocated and XXX, fiscal generated expenditures. quarter, X invested count earlier. remained versus a the of $XX and

our with $XX Our million term borrowings our cash, million outstanding $XX.X loan. balance remains in balance $XX.X strong under a facility million on and sheet revolving credit no

of cash on principal $XX term strong to accelerate allowed our Our the loan. $XX us flow repayment million million of

of dividend our on $X.XX be XXXX, quarterly on Board that we The common close dividend Directors per stockholders of September to business has paid record XX, at share. XXXX. Today, declared August XX, the all cash a will announced of of

XXXX. for outlook fiscal turning our Now to

per our updating year light to the fourth are that diluted the our mandates. earnings previously reflects on full trends third and We the XXXX, November upon also established note guidance guidance guidance quarter. current would and quarter expectations results share government related XX, based environment raising evolving I and our COVID-XX in of our range like for

of severity predict company the The cannot the pandemic. duration or

to expect operations and these our We balance the factors continue through fiscal financial performance of will the year. that impact

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

are proud third environment quarter return continue an to shopping pre-pandemic of the performance the as of as in in uncertain the pandemic the our habits. face of dynamics We to consumers very evolve and

is our that It our commitment founding sets principles to the from unwavering us competition. apart

the at always year, we and choice to close prices. we grocer affordable As for products the to highest-quality be the of organic continue natural strive

like would Thank you. I the for questions. to Now up lines open

Operator

Greg The Research. from Instructions] with first Badishkanian comes [Operator Wolfe question

Spencer Hanus

higher the a basis How wanted points This environment? I for to normalized Nice of sustainable get is Greg. Hanus Spencer margins into up sort It ask are again. was quarter quarter. this XX you just do as we on think gross margin. more on

Kemper Isely

the think year. have we'll margin momentum next to probably with that I continue at for least

Spencer Hanus

how I in CPG XXXX then as those the you do to price and terms increases And of start you this And X% sticky in look with X% And look those think then prepared to Are you get is? your we passing challenges do seeing you Okay. inflation through any like? remarks. to inflation, sort from of partners, higher mentioned increases? think what

Kemper Isely

as inflation I far it. a here of think is for stickiness higher as the while the

base are our products sell essentially, at our margin. -- we We we -- a

price issue on price a some And to increases. the you our have So based not products price but products you we've along -- sell, increase, particularly majority to an there But the can. XX% get increase being conscious with the of I we be can't able we mean, when of we that just we those pass XX% had margin. that are or price of.

Spencer Hanus

XQ. I sort EPS be talk perspective guess, implies as led you're leads Could even just maybe then -- And as raising gross of guidance, going the to helpful. although down And not in I still what margin That's sort you seeing that guidance, comp? that quarter-to-date it EPS to from raising is start more? think you about raised to of you

Kemper Isely

I the was the currently, is would say comp close X. mean, I -- to comp very July that

-- mean, in comp the But quarter. in compared in an So that July to we're June -- almost pretty seen X we of slightly months negative. I the rest we're improvement and other we've

of in for the So we're the quarter. predicting range we should on be somewhere that rest comp

guidance catch as did it was that As on -- far -- on our part? you

Todd Dissinger

with do question to the second fourth a I think quarter. that the the lower -- for second Is your EPS of part had correct? Spencer,

Spencer Hanus

the EPS Yes, guidance. Yes.

of sort driving what's that? So

Todd Dissinger

Yes.

this the quarter major as anticipate experienced some the And margin So we high quite some of we've as fourth At have in those we're have quarter. cautious. in a events in terms third the fourth don't in gone through we until we events, quarter. point, also, we risk

our into we're a in we our that sales months We terms performing this optimistic a was Month into guidance of September guidance. of about. we're our have we then environment, X-day runs have But And lot careful in the when very big the built sale in event the entire have month. building in of month anniversary year, that's new the upside X weakest a Organic that event headquarter fourth the quarter. September Last the

a careful but September, So we're we're have strong we'll being guidance. our hopeful in

Spencer Hanus

Yes. in basket terms of increased And you cases That the sense. have rise? Have guess, then, cases in seen there's any traffic variant. or COVID as been behavior I Delta size change started makes to with consumer

Kemper Isely

to issue. would in that early too that regards see say I particular yet any to it's trends

Operator

our conference question-and-answer turn to for the Kemper like over to Isely remarks. any concludes closing I This would session. back

Kemper Isely

our birthday. XXXX marks our our August and our to August help celebrate anniversary and full month on much quarter you our visit and results. call XX I updating Isely's XXth to joining our encourage year our safe, forward results. look have Thank and communities. very discuss you locations We next founder, of a regarding Please day. great us Margaret for you. between healthy you stay third Thank the fiscal serving fourth to to XX and This year one quarter

Operator

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

You may now disconnect.

Natural Grocers by Vitamin Cottage (NGVC) 5 Aug 212021 Q3 Earnings call transcript