Earnings call transcript Q1 2023

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Operator

Good day, everyone. Welcome to the Natural Grocers' First Quarter Fiscal Year 2023 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.

like the I'd Ms. over time, this to conference turn to At Thiessen, Natural for President, Jessica Treasurer Grocers. Vice Ms. you Thiessen, may begin.

Jessica Thiessen

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

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

and during reminder, expectations are and and provided call uncertainties. forward-looking this risks a As information statements are assumptions subject conference certain based current to on

a variety results company's forward-looking to Actual XX-Q differ statements and risks those materially most Forms the factors, in described of uncertainties could from filed and in the XX-K. including due detailed recently

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

turn call Kemper. will I to the over Now,

Kemper Isely

you, good and everyone. Jessica Thank afternoon

pleased We XXXX. start our are fiscal to with

comparable daily the the growth Our lift average strong X.X% cycled prior pandemic from first store trends in as we sales quarter year. was

first each month Comps quarter. of improved sequentially the

three-year each of representing Our for three quarters. three-year previous a in the comp sequential the comp increase XX.X%, was

quality concerns. offering affordable and drive the as to pricing, highest balance and our natural on differentiated Our with continues organic products, always consumers health-conscious demand marketing emphasis of economic coupled value

afford Always products. empower is uncertain quality the to founding current should their is economic everyone high of inflationary nutritional with environment. principles affordable to pricing particularly our able five be and one health and relevant in We believe

we studies always products core We and the affordability our versus cost is on commitment. hard lowest of our pricing pricing our affordable to primary our competitors items regularly of One affordable at conduct our we ensure our work facet meet across assortment to source everyday products. possible

promotions our sale we highlight hundreds affordability to of items including budget-friendly {N}power our pricing facet that on loyalty for options meals. special members, second family A offer to of is

our up X.X of {N}power from the the sales penetration more by first grew XX%, loyalty benefits million to our was net deep the ago. offered growth {N}power awareness year our than {N}power valuable with customers. The Our The program of quarter. program by engagement of members these customers' reflects XX% and XX% a the end program loyalty

represent Our quality expansion of from offering reflecting quarter, Natural in X.X% products up In heightened accounted facet of prices ago, affordability. our well our and and Grocers-branded our products of first our third entire total the interest Natural assortment. at year a of value as compelling X.X% premium Grocers-branded delivered Grocers-branded customer continued the quality for a as Natural sales,

products Grocers-branded to high-quality fundamental quarter, Creating launched first products. has legacy our to the growth. eight our and we part access education Natural been is new During and affordable and a of nutrition

successful model is flexible urban, consistently and suburban has in business and communities. Our rural proven

Denver, eighth in Colorado, Mountain of Reflecting include two opened this our quarter stores in the McCall. newest our our in store first opened market which in and the Town January. That store during fifth diversity, Idaho

We about these are of serving markets. excited both

one in to track two fiscal to open new XXXX. on to relocate are and stores We stores six four

eight and we year next supply return improving and stores new to as construction six the conditions. opening several years, anticipate to between we Over expect per chain

and service. closing, and prices In work the commitment hard to member thank their for affordable of quality continued highest excellent customer want our and goodXu I crew to natural delivering products every organic at

discuss guidance. our turn financial I results over and to the that, With call to Todd

Todd Dissinger

afternoon. good Kemper and you, Thank

year of with of anticipated expectations of The in our the first higher as labor pandemic and this the results quarter the line last strong quarter trends rates impact the were in year. challenges cycling first we

million. $XXX.X X.X% year increased prior sales from the Net to period

a of count increase by of decrease of average a X.X% Our transaction was increase of X.X%. sales transaction offset comprised size X.X%, daily comparable store partially

of levels moderation driven by the decrease more primarily in partially in SNAP normalized per X.X% away-from-home was basket. and fractional EBT size transaction customer the by reduction retail consumption count reflects inflation, increase The food The transaction transactions. in item count pandemic X.X% travel price of and year-over-year, fewer offset trends a

We grocers industry product annualized inflation first rate the X% estimate stable due basis to approximately foreseeable than been our on an through continue of chain. our specialized we for Historically, quarter, the lower trends. was for more do expect has In cost the the cost future. that to quarter, inflation first along than product to inflation conventional and so supply impact passed pricing

item first than with less previous one quarters. quarter consistent prior item and to four basket by count down The the year was compared per the

quarter, supplement departments first supplement were to grocery. the strong as the cycled demand we driven and meat down dairy, pandemic. low the performing year single digits compared our In by The strongest was comp prior

However, was basis. up on mid-single supplement comp two-year a digits

margin higher increased by points primarily primarily XXX Store distribution as points, and a rates. expenses. XX higher basis quarter the to result Gross wage decreased a by attributed driven driven product of labor percentage margin of XX.X%, in sales increased basis freight shrink, first lower to expense as expenses

Administrative expenses benefits, higher increased basis technology as and driven points, by primarily amortization, sales a percentage and XX salaries of legal expenses.

earnings first million $X.X first last the of year. $XX.X was diluted $X.XX share earnings with share per first of quarter. quarter. Adjusted of in net million This the the $X.XX in of to in or EBITDA was income $X.X per income quarter million diluted compares Net

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

flow relocated operations from in we capital and cash free million. $X.X million primarily net and quarter, first invested of stores, the million During for expenditures, cash resulting $XX.X in new of $XX.X generated

Directors declared of that all per will stockholders XXth, $X.XX of and commitment business stockholders. we March quarterly operating to model of business close performance XXXX, cash Today, returning The The our XXXX. on dividend and our record value in the XXth, our confidence to reflects has position, announced of February paid our be at financial Board on dividend a dividend share. to strong

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

trends, Our including outlook line of reflects trends first current inflationary the were factors. expectations, environment, consumer operating and our that economic uncertainty quarter results in the with

guidance and remodel support between the includes to one or $X.XX six towards achieve to X%, average sales million stores, growth capital positive X% growth between per and daily new negative to to two $X.XX, four open stores, achieve following; store initiatives. direct Our share $XX $XX our million comparable and earnings expenditures relocate diluted

are our pleased quality the model, performance the affordable of at business including We line expectations proposition our we results value quarter attribute to products consistent with year differentiated our that in first closing, high guidance. In our for customers' full and were our with always with appreciation prices.

to be We continue for drive by recent trends, in encouraged growth to confident and all operating are value enhance our stakeholders. our we ability and

I that, to open would the you. With lines like for up questions. Thank

Operator

Instructions] and time, the question-and-answer Ladies [Operator session. at begin we'll this gentlemen,

from Our Spencer Hanus Research. ahead your question from today go comes first with Wolfe question. Please

Spencer Hanus

little you're terms the is you're in of Good in seeing you momentum about, talked for back customers you quarter seeing the specific afternoon. per And that Thank to-date? then first taking bit that you Can category decline there metric? that the in any a basket about terms the that of units comp pull question. talk in

Kemper Isely

your sorry. the I question, didn't part of first Spencer, catch

Spencer Hanus

momentum perspective? how you're trends seeing topline comp Just the a quarter-to-date, did look -- from what that like

Kemper Isely

quarter. we to similar for what last entire the quarter very experienced They're

Spencer Hanus

customers transaction, there pull there pulling then it categories down seeing back? you're are And units back? helpful. that's in than terms where of You the are any was where terms are per of less unit, but in seeing mentioned Okay, what customers that one you

Todd Dissinger

So, the largest been categories grocery have and produce. would

Spencer Hanus

Okay.

Kemper Isely

our remind you, Just it’s piece a units. of

Spencer Hanus

your inflation, terms hearing quarter. year? you from are XXX price that at how their out that of your in then expectations inflation Okay. for that's sort of full we're inflation today? peak trying you the tailwind suppliers Do in you basis and take they're the increases point And of to in called from What the terms think informing

Kemper Isely

that we'll think the probably similar clear rest picture. of inflation I year, hard get this quarter. really The a to it's see

Spencer Hanus

for color. enough. Great. so the you Thank much Fair

Operator

with Scott RX Please next question from ahead Our comes go question. from Mushkin your Capital.

Scott Mushkin

throughout to year. start expenses, you release. a Hope them a press I challenge Labor your economy. guys. think the in Clearly, the it's guys you Hey have flagged good

really I get it's to think still probably in Colorado tough people. area,

think I gotten a it doing X% bit how what increase concern? little easier? are should it is Like is do we mean, Has So, you we a anticipate? forward? how going that the that about way? And

Kemper Isely

$XX I to have plus we [indiscernible]. dollar the now hopefully annual an do $X that cycled mean, our won't think I that everybody hour have in bump is Colorado and year. starting wage this to

have The only cities of inflation lot going inflation. we're in and place the where -- to minimum is see you wages tied to states still a that wages have where

Washington. and up have that Denver, We in Oregon,

end seeing We're be I that more year will year of Otherwise, this to for at inflation. versus it's already staff last a year think normal the year. wage easier this stores that

Scott Mushkin

Okay.

hear it's about interesting things are you and in industry. sure in guys So, Eddie kind the because the your with Steady to prepared -- questions comments not last I'm guys' the that's remarks just case of that

a we're you is but model. slowing different industry hearing the think have from actually down, what much I guys obviously

be So, of remind us grocery just like of macro rest necessarily, How bit Or not do more how thinking of it? attributes rest feel the the you're the us remind of maybe but not volatile performs how just industry just about business? as trouble. should we has the kind maybe the of because -- business little a the you as your

Kemper Isely

Well, are our businesses have base customers incredibly loyal. the --

become didn't they stores course, nowadays. ESG and who at caring phrase. became affordable us standards So, We were high that having people about we the -- our as I education, customers but nutrition our ESG, environment call a created kind pricing, about for loyal. of standards environment And ESG before has talk where it an ESG we the -- so having about having of and work really caring popular mean

And because it the -- of of word then built also so and mouth.

makes that have of customers to because don't as so it shifting competitors other that. that much we of And so

times communicate we standards, to company informing like least attributes our all really our of and three and And week, our loyalty through at -- program of our a works. them other of prices it three also customers times affordable {N}power

Scott Mushkin

-- in the I then, were Great Recession, the if remind back don't Kemper, And did but know you do? company public how

Kemper Isely

comps that did retailers not. We We Great positive well. Recession the had did during actually pretty

at So, at but public time. we have the comps time, weren't positive we the did

Scott Mushkin

if remember I went Whole Foods can Because negative correctly. think actually I

Kemper Isely

They We a bunch of others. did not. did and

Scott Mushkin

You did not.

Okay. This is great.

does And interesting maybe but stable Thanks more guys. business think discussion it of me. rocky anyway. get things just bit for as little it's an actually, this that a I

Kemper Isely

Thank you.

Operator

I'd And ladies over turn question-and-answer we've today's the session. and gentlemen, at to like remarks. the management reached this end for floor closing any to time, back of

Kemper Isely

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

serve. we history Good speaking We look performance our organic always bye. quality proud have a of call of XXXX prices you, review next our the the and at are results. and our Thank highest products on day. providing to communities great to affordable you forward our quarter We with and to natural second

Operator

And conference ladies thank joining. gentlemen, conclude and today's call presentation. that you and for will We

may lines. disconnect You now your

Natural Grocers by Vitamin Cottage (NGVC) 2 Feb 232023 Q1 Earnings call transcript