NGVC - Earnings call transcript Q4 2021 | Natural Grocers by Vitamin Cottage, Inc.

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Operator

Good day, ladies and gentlemen. Welcome to the Natural Grocers by Vitamin Cottage Fourth Quarter Fiscal Year 2021 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 Ms. like now the to conference I’d Grocers. Treasurer Jessica Assistant Natural Teason [ph], for Ms. Teason, may you begin.

Unidentified Company Representative

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

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

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

the Kemper. Now will over turn I call to

Kemper Isely

you, XXX% sales I net accelerating our comparable per comps, Thank We record positive company’s XXXX Fiscal share share marked accomplishments afternoon, higher fiscal finished in and store this $X.XX. earnings sales for take quarter, expectations. year all you margins growth. store consecutive billion in performance year. strong We growth a the pride great Thank of with drove us expenses fourth the of everyone. today. daily exceeding of year our lower diluted joining with average earnings had $X.X XXXX and per and of XXth sales Jessica, good

by as drive to continues our principles success, founding our to strong results. commitment evidenced Our our

to developed always dietary performance strong loyalty. result $X.XX products, our and strong increase cash to per are a our appreciation our the we The and an our believe in per position, of vetted of common our our financial share, of increase. prices share they with announced to value we XX% of supplements operating for in We Today resonate at $X.XX and continue as increasing shareholders. natural model commitment have carefully nutrition the our as reflects We consumers pandemic. returning and value have healthy engagement a from offerings dividend customer and business organic quarterly affordable confidence that seen increase dividend a

During in we Missouri, the Columbia, Missouri, of our and our in quarter, new stores remodeled one opened Kansas. Wichita, one store Springfield, in store relocated

of or For the fiscal total year five relocated remodel we XXXX, three and stores. a opened stores

several new with pleased of past the relocations the performance We’re over years. our stores and

activity, program during to unique quarter. customer including promotional Loyalty fourth and as drive our continued well Our {N}power approach growth marketing to as engagement, the sales

promotional event with very September, cities XXth convert In parks and Month free. August free focused our products featured on and events, beyond a being which a fundraiser efforts Organic to Our discounts successful was to support Harvest and stores anniversary sweepstakes. chemical marketing promotions, and pesticides, exciting in helps

X.X% from fiscal net the fourth was point slightly a program with total a quality of and XXXX, growth earlier. product our our the branding of an products, price for as grew premium we up a private {N}power the remain and by we offerings SKUs. Loyalty members, quarter XX% third versus Grocers brands the with In million to company at which private X.X quarter driver. penetration In a over brands {N}power Our affordable year for brand quarter, fourth in position year and ago XX% quarter ended sales. our Natural sales key XXX sales XX% a compared differentiation up represented Consistent

year end. approximately was number of total X,XXX Our SKUs fiscal Natural Grocers at

in began year. Grocers supplements of brand this relaunch Natural Our March

legacy of affordable growth demonstrating branded customer’s high and in values has interest company. a quarter, offerings. quality fourth Our the being our a driven supplements growth in category Natural exceeded the Grocers

Our to and hard operations Crew We our our commitment healthy, is and work stores communities to for a authentic. goodXu these future ensure values. our sustainable customers, supply our building chain reflect

reflects October We increase store XXXX, represents commitment combination increase per $X and $X resulted more donations our million company value product food XXXX, $X in fiscal in investing in XXXX. hourly monetary and our banks. to than and local to the been months increase company we crew. donations goodXu $X and the fundraisers for hour. of implemented past a our customer hour In second This permanent pay since of a our have crew donations Beginning XX in driven per and in-kind food million longstanding

company like hour, Natural by I an store products on work reflect past organic quality, grown a closing, and want I over full-time XX the to to member times every natural have pay for also wide the increase, and goodXu and their thank hourly commitment hard to for X including at to helping hour highest prices $X in Grocers In principles. per credit. In $X moment our to always would $XX.XX average their continued the With our sales Bucks of to XX our crew Crew us deliver is dollars. the years. over take founding we commitment Vitamin those affordable years, accomplishments billion

to prices base Even earnings nutrition brought and has by importantly, affordable times. and jobs. science-based XXX by over communities nutritional have X options healthy at more store grown and X,XXX over created education free additional Our we times X

discuss proud Todd that results I’m of opportunity am equally the the over about us. over our let and excited achievements very With last the our financial turn ahead decade, of that, me guidance. lies to I to While call

Todd Dissinger

In the of from X.X% prior afternoon, customer’s attributed pandemic most strong growth, fourth of last top an and outstanding to quarter quarter on during had a everyone. store increased top by pre-pandemic you, loyalty, recent year. quarter engagement a good fourth increased the average The to COVID year the X.X% XXXX. trips was the performance The We and quarter, a our and trends. in transaction levels. positive daily transaction quarter Net posted average XX.X% in customer average shopping fourth $XXX.X comparable million. fourth comps decrease The X.X% the drive offset count to Daily counts sales X.X%. to partially our continue increase sales count in size. response normalized of transaction fourth increase increased period XX Thank of on increased quarter daily sales Kemper, primarily towards increased as

supply although supplements. specialized up pre-pandemic at quarters with quarter to the to industry and in quarter fourth Out stable we be to performing However, comp to prior elevated a XXXX. consistent the stocks year. category, fourth fourth pricing. we still the over lower level compared remained continue and of category the the this in top supplementing quarter this the basket general beginning a relatively size the on than our our inflation along the consumers associated necessitates that to XX% levels a tends pandemic, Note X% continuing to largely pandemic, of of range remained is to two-year XX%, during high with our in coupled stacked impact than stock compared in are pre-pandemic to basis. quarter the the as are Out interest pass We believe remained above attributable fourth response nutritional XX% in success product via remained which of intake the a Supplements their due seeing the more chain. X% in rate with levels. Inflation branded the of strong of over of the standards, over with

availability per expenses fourth $X.X normalized level strong were touch or XX was a labor share beginning in to basis by prior of earnings $X.XX net with that earnings expense improved to Fourth reflects of share definition to points, quarter, on to market reconciliation up store The basis $XX.X improvement related fourth This of compared exclude I and results. quarter shift fiscal million fourth in of product We The compensation XXXX also higher to $X.X income decline in EBITDA measure expense earnings Please million points. fourth margin per $XX.X quarter the impact fourth of sales supplements XXX with by announcement. expense. provided like briefly to to would the fiscal quarter. year the this our been gross a in for and margin based and diluted of leverage. of the fourth and higher Store fourth labor contributed income had in expenses quarter compares the the was quarter an labor excludes XX.X%, between expenses $X.XX The the comparability XXXX Net and Adjusted are a a quarter standpoint. XXXX. Adjusted A fourth offset the note year. million in tight year. adjusted margin from product EBITDA mix. comp release the margin year. share diluted more XXXX fiscal of solid enhance years rates. in of occupancy last compared quarter last million, to and our EBITDA the recast performance EBITDA driven the full based labor quarter adjusted share of favorable of reporting, store compensation has in

X.X% increased total XXXX, $X.X fiscal to For billion. revenue

first expense of stack net basis XXX and the resulting gross a Our a expenses, on product margin growth percentage two-year prior Store and XX XX basis comparable basis, margin increased by increased increase stacked as sales. XXXX labor-related lower daily average in occupancy the expense basis due higher in margin basis. was the a store driven points. was gross to an than X.X%, year. shrink Fiscal higher store increased margin sales On primarily of XX.X% half two-year of year to points points,

and $XX.X fiscal $X.XX. For share to This million, Adjusted was of fiscal XXXX, EBITDA $X.XX XXXX. net in per compares share earnings of was in XXXX diluted diluted $XX.X $XX with per million. million income earnings

$XX our balance balance and liquidity finished million outstanding borrowings million cash year to and our $XX.X equivalents, Turning term cash facility credit a loan. the in flows. cash with a no under We million in position revolving on $XX.X the and sheet strong

per generated November has new on of $X.XX reflects paid Capital million. from our increase capital stockholders operating two capital. we shareholder XX, returning $X.XX $XX.X expenditures the $XX.X five flow close quarterly that The our Free with or stores, objective XX, store dividend performance future of business confidence and purchased operations Directors be XXXX. to stores fiscal is of by position, in was For will cash property included our record Today, we our sites. December million of from value cash all announced at $XX.X remodeled we of share. common our million consistent XXXX enhancing financial and strong future relocated dividend of and three increased to XXXX, Board opening for net This in and the cash on invested expenditures.

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

was the upon including guidance based developed current COVID-XX Our trends, environment. current

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

For achieve for to zero support and $X.XX, stores challenging fiscal three are between relocate to daily expect growth fiscal the our open has open and deliveries. construction per and XXXX, six and initiatives. stores to growth to Opening average to returned to construction. we due conditions million six we and sales new comparable between share relocating eight subjected earnings the four six and four $XX in store between achieve $XX equipment new stores, year, new stores million $X.XX in experiencing to been improving towards stores, stores to expenditures four opening X%, We to process per direct diluted thereafter capital XXXX intend store delays and to

current by line sales outlook with full XXXX that comps our year expectation in quarter will fiscal be Our guidance generally range. the reflects

line in range. First our comp have and been of quarter rate the high fiscal fourth quarter-to-date XXXX comps with growth of quarter consistent in the XXXX with end the guidance

resulting sales of driven we to percentage more improved labor pandemic prior XXXX comp to XXXX incorporates XXXX, the year each half that quarter availability. sales year the anticipate setting hours, and higher year-over-year outlook second from rates fourth and many store factors, increase quarter. we half we gross fiscal of labor year, values, anticipate our closing, fiscal In higher XXXX, a slightly anticipate to record we labor as compared strong of store expenses a higher by than we dedication lower driven margin cycling labor-related the in flat by strong our our appreciation requirements. In another XXXX. our expenses attribute store foremost, our Additionally, first our had of fiscal across commitment but of We to expenses In the staffing were customer’s will percentage and in cycle prior a that crew. principles as will for consistency be as the

highest products always the natural affordable relevant. strive We uniquely choice Grocers grocer prices. organic differentiated of is to and be quality and Natural continue for very to the at

confident I would the recent We lines to and long-term encouraged our ability you. enhance by questions. of our are growth driving all operating With that, for continue value in trends like for and up to open Thank stakeholders. our

Operator

go Research. [Operator Instructions] Our Greg first from Badishkanian ahead. question Please with comes Wolfe

Spencer Hanus

Good a just bit you took during the acceleration well? for then talk Can as afternoon. what Greg. from you sequential who quarter that? This is Spencer in on share drove and about in Hanus guys do And comps XQ think you little

Todd Dissinger

So the Todd. --thank you, Spencer. This is

quarter? was your first question, believe I during in the of part trend the So the fourth comps

Spencer Hanus

the that since XXXX. your highest you Yeah. unpack just for think guys Can have seen a because us, bit it’s you stack, XQ to little Yeah. I

what on acceleration sequentially drove So any color additional the would… there really

Todd Dissinger

Sure.

Spencer Hanus

…be helpful?

Todd Dissinger

QX So QX. positive August the July, September higher then higher, and was was comps trending In through in with August. than if recall, negative. you September, the comp slightly favorably sorry, being with we was August comp It being I’m and negative in saw

Spencer Hanus

just margin incrementals XQ the this front, basis Okay. on are up That’s about think quarter gross And margins XXX strong I helpful. pretty from and Got it. points XXXX. then were

So seen of quarters guys level over sustainability how that about have higher profitability just in few and particular? you think of quarter last should this the we the the

Todd Dissinger

double-digit the Well, The supplement was was the key over was the -- one in a of comp supplements. quarter fourth drivers figure.

to was saw flat improvement back probably supplements. We full likely so particular, seeing positive and on the of slightly see on margins support great half the the or year, that we we’re trend think that year QX. to this for we where be we’ll and some into we’re in pressure cycle of first as margin margin continue in QX, half help to that the in the So expecting year

Spencer Hanus

could I Okay. thinking the And some when sort X% quarter? to seen sort look have same guess, the That’s through X% from you’ve helpful. your cadence could year inflation the about And But of like? on then, level pushback reset then, you’re guys are contracts and this the lines, you of inflation seeing inflation script, I any along of how you of inflation. next throughout you And done customers than in what what higher pushing think mentioned that talk you then of historically? about

Todd Dissinger

Okay.

--during and inflation pretty in slight maybe going range. steady. So we slight -- increase guidance the in we’re to steady, what our experienced significant, Q we but out build would XXXX, trend that in is be sensitivities or X% some during And with a a then has which pretty improvement not inflation been anticipating similar fiscal QX, approximate that run inflation, did as it’s been to

Kemper Isely

so costs don’t is isn’t regards to there of blinking even Kemper, And similar our to as, and having this then, customers the as as costs is far seem absorbing I don’t and to or issue. our be that the everybody higher think as or in choice, same higher pass far customers prices, along the much

Spencer Hanus

think Okay. employees? quarter, raised on the you investment there’s Got it. labor pay you retain then And mentioned are this you front have hourly improved seeing from And rises guys recent I needed more that’s to pay employees? turnover the do the you any think also again

Kemper Isely

that core our staff isn’t has then significantly. that the -- would comes It’s off. been and turnover I goes just say over the periphery the staff on turning

that people our was biggest, for lot jobs. there just just get paid on It mean, extra when but payments it the to little wasn’t couch. the of couch, people apply biggest was had that’s a is turnover, the always So want off hard to stay was was, really we unemployment were issue to out attracting come to bit of they because I more to getting a turnover. there’s the there

gone payments of Now not extra we easily be instead now people that the much work coming away, the seem to hire that’s than from -- able were government. more pre right that to

Spencer Hanus

you Great. guys. Thank

Kemper Isely

Thanks.

Todd Dissinger

Spencer. Thanks,

Operator

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

Kemper Isely

to much quarter fiscal discuss Thank for results. our XXXX fourth and you us joining very

to at We prices proud high affordable our in you. We first performance on you sales day. Please my an is stay achievement next communities. growth, a stay opinion. history have look and XX to of comparable service with great speaking and years our our are store of always review healthy products and our our now Thank had quite we’ve which forward quality providing to XXXX positive and results. call quarter safe our

Operator

is concluded. attending you now for conference The today’s presentation. Thank

now disconnect. You may

Natural Grocers by Vitamin Cottage (NGVC) 19 Nov 212021 Q4 Earnings call transcript