NGVC - Earnings call transcript Q1 2022 | Natural Grocers by Vitamin Cottage, Inc.

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Operator

Good day, ladies and gentlemen. Welcome to the Natural Grocers First Quarter Fiscal Year 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today’s call is being recorded. I would now like to turn the conference over to Ms. Jessica Thiessen, Assistant Treasurer for Natural Grocers. Ms. begin. may you Thiessen,

Jessica Thiessen

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

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

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

turn the Kemper. call to Now, I will over

Kemper Isely

us you and Jessica you, Thank joining good everyone. Thank for today. afternoon

We strong are start XXXX. pleased to fiscal with our

continue trends environment. positive effectively we operating as see dynamic a navigate We to

into to of comparable strong transaction Our the average operating margin. daily per basket business. in both across first XXX.X% count million a X.X%, in included able results We stack quarter. net strong Daily our basis, and $XXX.X average first Momentum profitability, increased rose size. higher and XXX of remains a sales increases comparable basis sales store XX.X% including sales X-year store On in X.X% point were $X.XX, and share diluted increases increases quarter sales including of respectively. earnings leverage improvement

who offering always natural We prioritizing ever. a coupled health wellness education, than key free affordable provide science-based continues with and principles organic and unwavering Our a in element remains consumers at resonate founding our to our prices, which nutrition are with more products commitment success. of differentiated to

members, a in from grow, sales a {N}power quarter program The XX%. almost year-over-year loyalty quarter loyalty net continued to XX%, fourth ended and the increase engagement penetration evidencing XX% with up customers. X.X the our deep XX% We of million {N}power ago. our for Our with year reached

quarter annual We The non-GMO trends our our promotion our were event in Holly in around positively in in strong strong deals Thanksgiving supplement the by consumer demand holiday the December. first quarter. October, continue saw offering first for sales impacted

For the total products, exceeded X.X% from average. fourth branded quarter. in category that Customers sales to the to drawn third quarter, X.X% the consecutive for be the supplements sales the up accounted overall quarter, company comps Natural continue of our first in posted Grocers which

products, we the launched dishes new During additional XX supplements. branded quarter, and including dietary frozen side

relocate During to pleased and the with in store remodel We stores customers’ remain X quarter, response on to we fiscal open X the X very are new Colorado Greeley, stores in to and move. Greeley to our our track X XXXX. relocated or

continue We to challenges. manage chain through supply

quarter, first out-of-stocks the with relatively were consistent quarters. our During recent

saw our and increase January. we December that late in began However, slight through out-of-stocks a continued in

Natural quality guide to We of wellbeing today and this released community. by national Grocers were inaugural XXXX, was our crew principles and founding company sustainability and who the that was to and built health education; our always nutrition to these the and our social communities on five committed affordable focusing Earlier working on is our report. business The our principles. organic we by recognize practices, remains principles: week, with pricing; would and in environmental, These vendors governance planet. values closely products; are many parents continue founded my address core challenges. inspired

want work hard With helping these the highest-quality continued practices their values. and to let over equitable. us sustainable that, Natural more and deliver Since closing, service. call of prices products me make for Our and crew supply In guidance. results just Todd excellent Grocers natural crew’s stores’ and dedication at to customer and goodXu the commitment to affordable financial embraced discuss founding, has system our member our these principles, operations, our and turn organic to to I our reflect intended ensure to food thank its every chain

Todd Dissinger

you, everyone. Kemper, Thank and afternoon, good

As Kemper reflecting results our quarter indicated, and growth were favorable expectations, expense above leverage. first sales

XXXX. the Our increase first count transaction comparable from were X% size a $XXX.X in increased X.X% year-over-year inflation in the X.X% a of the basis rose quarter. Daily sales the first of quarter X.X% to slight net increased We Average quarter, transaction experienced for during first average top X% XX.X% the quarter. million. up average sales X% fourth a to uptick on quarter on store and fiscal range

from Operating the quarter Adjusted many with versus last $XX.X of fiscal X.X%. margin improved ago. up XXX.X% constrained income points increasing more to operating performance million. We income leverage. X.X% expense and store occupancy drove leverage. cycled of XX.X% to via decreased in share XXXX. significant sales of year and impact sales compared first expenses to rate. as including our Net Store benefited and drive margin level basis million, which retailers, XX in a labor expense points XXX.X% dollars availability Gross basis Expenses in margin pandemic-related year-over-year to Like pricing. increased primarily of product performance, late continue XX.X% terms $X.X an We XXX the margin basis year, in earnings than per the was pay to leverage by driven higher we we and experienced and $XX quarter. incremental helped pass expansion. points strong terms EBITDA hours $X.XX diluted increased million strong improved expenses The increased of labor $X.XX to XXX doubled along normalized of

we loan. balance term $XX a ended the outstanding credit position of borrowings We cash under financial equivalents. first had to flow, $XX.X the revolving $XX.X cash our on sheet in strong and Turning cash quarter a facility and balance million million with no million our and

stockholders free of $X.X of we million million. operations of $XX.X expenditures, net from on cash declared and cash February XX, invested XXXX, quarterly March XXXX. generated cash resulting per to a flow at in share. million Today, XX, on our be we quarter, has will Board announced close first the The $X.X of During that in capital of business all paid the Directors record of $X.XX dividend dividend

outlook current review would Now the environment. trends, to I which rapidly including our reflects like evolving COVID-XX

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

confirming we our established are XXXX, year guidance mid-November. fiscal first We in for which

maintain is light guidance and While quarter’s first uncertainty our the to the our appropriate at COVID-XX the environment issued expectations, we around feel time it in trends. previously performance of exceeded this

a between includes three following: and diluted support model. to expenditures stores; to In customers had $X.XX Our the million stores, relocate and growth average closing, store towards share six million direct four we to achieve our guidance quarter new per we earnings $XX to initiatives. sales between achieve open differentiated our growth attribute capital or comparable to four to that strong $X.XX X%, X% $XX business remodel our appreciation daily

and for for like With our are to We continue drive to by growth stakeholders. I questions. value trends, our in open lines confident to would be all encouraged up and the we you. ability enhance Thank that, recent

Operator

Instructions] with question Spencer We from question-and-answer Our [Operator session. comes will Hanus Research. now begin Wolfe first the

You now ahead. may go

Spencer Hanus

your Good should profitability able as it just and to about you start Maybe of to that a us the quarter. line that this talk really guess tougher I the think things one-time struck afternoon supplements we lap performance quarter. out guys. keep in top business you half, in forward, the Congrats as this should how we there profitability relates perspective? maintain mind? compares about guess there And little on second a then to will from I the level going to bit confidence a great be any

Kemper Isely

Well, only first two would Spencer, of the be well, similar pretty XX at and going January forward, as this days. we months February quarter actually, pretty similar expect

on as monthly quarter base. So, last a as far

carried after that Going as And because surge a in COVID then – to big far It predict difficult us fall. of that here to the to be of a to is difficult year. same to business subsequent profitability the have to goes, be the our positive achieve part first very It’s sort probably this I of would very as supplements ongoing to the it’s happened similar quarter achieve guidance. [Technical our half. year in seems this But in growth fiscal over of to achieve tailwind the fourth that, ability quarter there our – the Difficulty]. going to for expect

Spencer Hanus

comps as you guys expecting of sort is saw what it. Are basis? when any much through expecting visibility to expecting similar Got you there? have a first from XQ sort us to you X-year of a line what walk are you helpful. Maybe quarter-to-date, And That’s on quarter, maybe top think in perspective stack just you are you it. look the about as into sort then of moderation

Kemper Isely

mean the February, what compared expect of quarter. difficult we the basis, we [Technical – for first to much positive be last similar I to we X-year and stack comp, last for comp may Difficulty] get to course, in It taking a more we will – comp be March, what then, have got… would to a it’s And we to expect it because have were March, on February March I this January, similar experienced the

Spencer Hanus

in or are in-stock And seeing seen January. script, on any that quarter? second in other Got think in from then you you that do you the to then impact you comparing change any peers promotional how rates intensity? are expecting Are there it. the sales And you market? mentioned out-of-stocks Have worsen in the your

Kemper Isely

affect trends month, Difficulty]. really in don’t it the chain in up be end a that you firming problem. at I the available or out-of-stocks see though promotions. were like way should much a and is as the supply in They January, are time see even better sales in did that we are this seeing to be comps asked are seem [Technical we definitely better And And planned orders The February. [Technical shape about promotions looks January here Difficulty] the needed. to by of good then

Spencer Hanus

for about when of think you of growth to any are And growth staying on tough stores six Got seeing the in unit year, ability to operating the chain and you this new chain target? you climate that any get to context to Are hit it. to new you supply supply the the see that here? of and improvement need sort unit minute, four do – a in thinking sort about new how

Kemper Isely

have new issue an issues had have stocking we supply. as we only as had really we products where into haven’t with had The getting far stores the stores, equipment our issue

period items anticipated get that equipment have We are are have further ordering our out we store to or into that extending structure. on difficult then and we build-out going of to by tackled our kind be ahead

to able being brought stores new our online. in confident be pretty are we so And

Spencer Hanus

then Got inflation downtick of with or from into the X% could up And it. the year, be there to expecting any we are quarter half an in to or the be X% to constant that standpoint? here range, look back the first rest inflation ticking as of you sort uptick throughout this

Kemper Isely

it’s [Technical that be to be We pretty going in going think mean are definitely the going do second down to I increased we quarter, price quarter. notices the not Difficulty] in April substantial

Spencer Hanus

over one and maybe for of a last their And versus spending last have Natural bit years trend maybe recruited the you how you that could that then time? little Grocers different and it. Got previous same of and members cohorts {N}power that talk to you how over about But me. the you expect the one couple attracted look to talk the habits some

Kemper Isely

The basis even hasn’t spend essentially really around $XX visit. fluctuated that monthly are shop spending people around And on per much per as {N}power are per $XX visit. it a the we it. get person members that that customers And

able so them new members to we customers. And really are take convert and these good into

Spencer Hanus

that’s Well, helpful a point. really Great. data

Kemper Isely

week. us our to those {N}power works per Difficulty]. message three being new we well discounts message really or keep customers times and It four times add are we current are mean has been the engaged I and for [Technical – able really compelling week helpful per customers. The to program customers and able us

Spencer Hanus

color. thank the And in And for will I queue. much so you get Great. the back

Kemper Isely

Thank you. Alright.

Operator

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

Kemper Isely

you joining to very our for first much results. discuss us Thank quarter

you to We organic on price we natural history to XXXX stay have forward to proud our at call with the always our results. Please look and healthy products day. performance a highest-quality supportive providing serve. are in of second and great an our communities safe We next Goodbye. and quarter review the of our speaking

Operator

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

disconnect. You may now

Natural Grocers by Vitamin Cottage (NGVC) 4 Feb 222022 Q1 Earnings call transcript