- Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen. Welcome to the Natural Grocers Fourth Quarter and Full Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. Later we will conduct the 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 President, Natural Thiessen, Vice for Ms. Thiessen, may you begin.

Jessica Thiessen

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

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

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

Now call I over will to Kemper. turn the

Kemper Isely

you, and Thank afternoon, good everyone. Jessica,

company's net ecstatic that diluted XXXX, average of we year earnings fiscal for in guidance We our billion achieving store report are share. had per sales $X.X growth comparable to earnings had and record our We sales daily of this Fiscal share the per average earnings diluted year. and year year XXth XXXX of store growth. accomplishments $X.XX. in We of pride all marked sales consecutive comparable daily positive take great

line instituted cash returned fiscal several XX% strength in results of comparable Since our of confidence reflects demonstrating over to Fourth our quarter value the past performance We our position, is store to XX.X%, returning The stockholders. the the increased quarter more our stockholders. initiatives. years financial XXXX and dividend pre-pandemic in XXX%, diluted in our model that capital common have have will and our expectations the basket ago, were dividend levels, fourth a $X.XX and share experienced operating share results growth per with and enduring strong Three sustained cumulatively have business daily strong the sales after years. in or commitment to our few company average per cycled grown detail over highlight Todd performance year. earnings the last up has I business model. as a we we cover key relevance

{N}power up loyalty Our year customer to by driving effective quarter ago, the appreciation for promotional engagement. quarter of a and evidencing fourth The an benefits penetration program with increase We from ended continues loyalty program. XX% million the for this tool net be X.X a sales was our XX%, activity customers' year-over-year XX%. {N}power provided members, optimizing of

represented brand brands key increasingly last Natural year. are of label remain sales the focused driver differentiation fourth total X.X% in today's fourth sales, up In quarter, Our of point a from X.X% private as on Grocers consumers value. a prioritizing the and products quarter

by quarter, XX fiscal new grew offerings XX including the are tasting. they SKUs. and launched ready pre-seasoned cook, of good year quite and we wild-caught four private our seafood During are varieties In we that XXXX, to branded brand products,

at products company's value strong For of growth of the growth We the Grocers premium growth proposition sales Natural year, our the awareness the our to brand our quality of customers' rate. prices. this higher attribute offerings exceeded compelling

Turning now development. to new store

two our In Wyoming. store store quarter, first and relocated opened in store fourth Cheyenne, in total relocated a fiscal Sioux opened Dakota South stores new opened stores. and in Brighton, of our three XXXX, we year Colorado the During Falls, we a

performance the new with pleased stores and very of are these relocations. We

and materials new in development XXXX and the of Our in delays was fiscal equipment. permitting store constrained by XXXX and year construction, availability

a legacy supply return years, subject and to chain new eight Grocers a and being driven per stores several next Over the improving of expect has opening values six construction to to year, we conditions. company. between Natural

to authentic. In product supply goodXu our in practices year customer to the longstanding work more than in crew commitment our and these company fiscal in-kind food fundraisers ensure healthy hard sustainable communities chain and of to food million and donations and building reflect donations than $X is monetary combination resulted corporate customers, stores, of Our We $X and XXXX, operations, values. our for local our more million future donations and a product offerings, banks.

nutritional month, the health national free science whose surrounding responsibility We resources each that chain nutrition store $X store, per hourly crew. our a per more free nutrition full provide rate This $X year wage grocery another to third education we than pandemic. only fiscal increase In are was of the based community. education our our primary XXXX, increase customers is coach the represents hour since in increase the beginning for of providing this investment implemented $X offers in time million. the to Earlier hour of

principles, communities time me per to delivering This quality let continued hour prices over per With crew to products affordable crew. $X recognize exceeds I call we closing, the want average Todd always store including our goodXu to every average and guidance. our XXXX $XX of in per the rate to turn their company serve. November crew to $XX.XX that, member our wage full for our reflects hard approximately In commitment our Vitamin the financial work longstanding in results hour of Our now commitment investing founding at hour, the hourly discuss and wage wide and Bucks. compares including rate to to for highest

Todd Dissinger

expectations impacting line fourth quarter the year, experienced performance of in last X.X% Thank our and managed results the inflationary Kemper, in with everyone. consumer a to strong prior behavior shift $XXX.X in The you, pressures sales period quarter Net and good cycled increased fourth our year million. as we business. afternoon, from were

and of The decline the in comprised were average daily trends, decreasing comp levels from comp normalized of by size XX.X% count essentially increase of offset XX.X% moderation quarter count XX.X% sales home transaction second summer to fourth transaction consumption. The three a third year travel to a quarter. Our improved The more X.X%. flat, decrease X.X%, of food was decrease including away compared quarter and store X.X% X.X%. comparable of in the sequentially as reflected in the transaction X.X% pandemic

quarter last reduction of XX% rate fourth same along year, year. the was than fiscal so of The our in inflation, primarily year. inflation partially the a grocers than item fourth Historically, in inflation by In to stable cost X% do passed was quarter future. and specialized count the for than We that one to magnitude for to purchases. continue prior foreseeable through rate digit transaction per did offset chain. basket. peers. quarter, decline inflation fourth pricing In approximately fourth retail supply in percentage impact been conventional represents sales basket a product increase our more Additionally, fewer driven single of price product to The approximately EBT was compared number and lower the to our expect items contribute the to per to sales. down not quarter, low as the store estimate attributed the item our size less we peers the the the X% was SNAP transaction our due comparable and of the for inflation EBT total SNAP by was has our cost by X.X%

are our influencing digit. single supplements was a Note there as supplements decline basket include response general, were our performing could quantify, up sales fourth comp comp was inflation food to difficult than our grocery. These down. more to macroeconomic factors on quarter, item supplements last food year. in a and limited meat the quarter, trade the to two experienced saw item the than inflation strongest count fourth dairy, supplement concurrent count. evidence expectations, year departments consumers' cycled many factors food. quarter a of was shift strong within XX% comp we to In away sales be nonfood per the the have line purchases, year concerns. that positive the from with price lower consumers' likely In their home that and a fourth three basis, On lower consumers' In and we company response than basis. high comp While In

from label switched private products customers to Some equivalents. branded

quality customers price. Our a at Natural brand compelling Grocers premium offers

than attributes as important in over raised to is During our in price. to products had offerings, higher growth our we that product levels unit eggs It offering select a are that brand pre-pandemic branded pasture comparable that of many included supplements. to and the customers suggesting In-stock quarter premium the prioritizing levels. private still fourth returned note see quarter, milk, and grains growth fourth continue bulk bread, the such fed grass accelerated

full quarter as product to income diluted lower sales fiscal million higher XXXX quarter in wage stores fourth quarter. in million gross rates. basis compares asset and the compared fourth Briefly $X.X expense per XXXX. quarter million as year the impairment the long was Store Store two EBITDA $X.XX the the charges freight, driven of shrink quarter increased lived related to to quarter. in included million fourth to the result $X.X results. year percentage fiscal net Adjusted the XX now by higher labor margin fourth touching by XX.X%, earnings year. basis $X.X of million rest fourth or quarter share Turning with Net points of driven income of XXX per of a year This in of margin share of a of points, fourth earnings $X.XX last diluted $XX.X on attributed expenses $X.X increased P&L. expenses. expenses of of Fourth in distribution was the to decreased to the in

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

basis. store cost basis of Our and attributable sales was costs a store a store million of long Store fiscal XX.X% $X.X improved fiscal resulting closing million as as higher year, higher increase was sales percentage sales than Fiscal and expense expenses product of points leverage the on margin were offset an growth margin year charges year-over-year from occupancy impairment asset comparable in daily prior charges XX higher to year included labor three wage XXXX increased expenses in rates. X.X%, of impairment asset driven year lived XXXX. XXXX average year $X.X by Store in lived leverage. long flat and gross

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

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

feel We During XX%, inventory level levels, stores. inflation additions levels returning to our the in-stock new is inventory driven fiscal by current product year, increased appropriate. cost total and and for pre-pandemic inventory product relocated

was dividend fiscal XXXX. $X.X quarterly share. the stores, of XXXX, common $XX.X expenditures. relocated of operations flow property. Today, per of XXXX, $X.XX of we declaration the from generated of year and stockholders December three $XX.X For paid of Capital million. two be purchase net cash the the stores expenditures new business and to million on capital cash on cash XX, in company opening invested a a Free close of record announced the XX, previously dividend at leased million The will November included

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

Our guidance consumer inflationary consideration the risk the the pressures operating and uncertainty upon and of of a including economic trends, of environment, current recession. was developed based trends

on of benefits the focused productivity value includes proposition initiatives. outlook and store new growth, marketing store Our our

challenging half Omicron. driven is as of the we current sales by the cycle Our more will in that year comps Delta be comps strong expectation and first

expenses sales a anticipates that store year-over-year as by labor margin be driven will of higher will outlook gross our rates. percentage flat, Lastly, increase and

fiscal X% to negative appreciation customers' expect growth capital to diluted to record daily the $XX two sales closing, that X%, share many and For six average initiatives. achieve stores, year one comparable and and of factors, relocate achieve our setting XXXX, our attribute foremost, our had our another expenditures positive $X.XX open million new earnings In stores, per we strong, to and year store four to direct we we consistency $X.XX towards between growth $XX between support for but our values, commitment principles crew. and dedication million our to to

the organic at believe to natural Natural forward lines look be that choice XXXX. quality affordable We uniquely fiscal and opportunities very consumers. market We I many With the relevant We that, in always for to Thank continue to be would up differentiated of to continues questions. you. to the like open strive Grocers and the for to products prices. in grocer highest year the

Operator

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

Johnny Baldwin

This is Johnny Baldwin on for Greg today.

mid-single X% just sort XXXX you sort about comp into assumptions a for you guide expecting your X%, think of bit inflation, activity going see? you little the to are of cost promotional what of there, For you negative and can talk XXXX digits might

Todd Dissinger

couple A of points.

inflation proposition value the sales risks into would we're steady, the half and about against the at least the the are inflation anticipating half home the forecast of then some economic new of around QX not that the last consumer marketing up some recession. productivity. in last be, and some probably would addition and pandemic from of in that our built the think then And point of the of trends we're versus this tailwinds at half inflation, you seeing first on comps travel we're So some our risk then And year to half, the drivers year. away good benefit QX that if half seeing continuing, first And food with the with second in the and be from to year, in first in efforts then uncertainty and of the time. we're store and year the be back in year, of uncertainties about

Johnny Baldwin

think then of these like you about back the there? growth lift on out the going once term benefit target think when add sort existing the comps should the to of into to years long the comp should into the How How to stores. mix? eight And store stores get we we about we six

Kemper Isely

new have comps our years higher than stores. their have we Well, in they five stores, first when mature

we six getting end new stores two up seeing getting probably tailwind we're of getting and So the running. start and open. should at the in up relocations. up up clarity Hopefully, with stores year bureaucracies, good a a our cetera, once this of issues lot our we the good inventory new And pretty year, probably last we end ended of et with stores with for

Operator

question Our Capital. from next Instructions] [Operator with RX Mushkin Scott comes

Scott Mushkin

I I just as other have its around consumer behavior you retailers November, was more behavior mentioned thoughts behavior. heard referenced. detail consumer into or be really seems you October could what wanted got to you their from and you to wondering -- any we think any I And We've shifting. progressed and around the that changing that offer if

Kemper Isely

noticed we've again. reemerged is that one the cycles vacation really in Well, thing particular that have

out October Before the the right pandemic, of we tend schools pickup then noticed like October. in fall from break we school always there and that had and a for -- two breaks weeks end after a the lull go to lull, of was in that in of October now lull

trends vacations really summer the -- and stores impact we've have noticed an on So really customer high. we've really the in the accounts when months, noticed during vacation are really the had

And of moderated other substantially we a compared The bit. that pandemic thing the to quite supplement mentioned, year, this of to sales the compared really tailwinds that. we've year year, end as noticed last last and our Todd the skyrocketed have they've

-- eating away the a has restaurants sales eating stores. again, out have taken from seemed food little noticed to we've of the that. bit And people our in out So then, of

Scott Mushkin

any the still But you a I flavor as you wonder seem because is that think up just work you in really guys or quarter. consumer if we last, there don't weakening month the the about pretty think they so, have or it through I -- strong. said say, as

Kemper Isely

our of lower noticed they're our substantially. decline really at our our has the low a end significant SNAP definitely that moderated is -- stores. XX% SNAP. purchasing -- on lower I we've the seen that they mean a thing are not definitely amount but the the Well, sales, We've purchases the end in consumers weakening end of in

primary customer really purchases, for, consistent -- regular thing. in the pretty Our still said, vacation I are our their staying customers except like

Scott Mushkin

it? agree Obviously, headed So little we're better of little the higher then a kind up how think guys And at us some that? but into it can for you that, Remind that are get guys remind goes What do bit. said, And remind how and harder, a was but tighter. mitigate that us recession How of a about comes probably with much I it when assuming business you products performs what do a end little things performs. rate 'XX. expense. with us the of your to you, unemployment makes

Kemper Isely

beating is One for sell. have a we egg one instance, marketing four then for the I feed where of things And free of four now under right at deal our our staple avocados essentially in you family $X.XX of that beating is definitely that you a and promotions you items family something $XX have together $X.XX that bundle for you the we do people a items that have focus so every we on nature. that essentially several under market. that meal your affordable And day is of that deals, also. everybody's $XX feed then price pushes organic -- range pricing have or eggs meal on products that everybody mean, big of are for or understand

we really marketing those offerings. our focus So affordable on

As on because eat to vacations good far tend go happens, a be to tend actually for less. as business out can when less an it to extent, and people recession our

fills. very I our means really that at that we They which of consumers, they're out home, our on the resonate core more our on care bit just little three that we if who a And our it helps also be four make {N}power can customers that XX% on the us think eating end can promotions helpful. at and ends and is via pull the -- supplement that we now to body get times we sure the bit sales have two might doing. our are a other with a the little department but able fact so with correct our e-mails. to And so depends make market end, It back good food out or customers and {N}power there the them with marketing on week

Scott Mushkin

big increase. very Yes, powerful,

question is then on new And How last my you about performance. So that? are I'll yield. store feeling guys

Kemper Isely

bullish performance. new on really our I'm store

coming good think the that. and we've some next have fixed good from results we'll really up sites think exciting I year, some I over

Operator

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

Kemper Isely

year anniversary XXXX, XX Public marked In the our we of Offering. Initial

last increased base sales our have at XX rate. earnings an and we even store and the nearly years, created tripled During an faster

have we X,XXX Additionally, over jobs. created

have we have enabled prices importantly, the based highest access quality, More and free at nutrition products XXX our local communities to science over education. additional affordable healthy, to nutritional

We a our ahead. our the forward equally you We Thank and call opportunities speaking results. proud have are to that lie Bye. the achievements on next great first you over decade review day. and with XXXX to about very of last excited look quarter our

Operator

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

disconnect. You may now

Natural Grocers by Vitamin Cottage (NGVC) 18 Nov 222022 Q4 Earnings call transcript