NGVC - Earnings call transcript Q1 2025 | 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 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

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

Jessica Thiessen

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

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

and during uncertainties. information statements current differ described from Actual assumptions, results As and call subject are in on conference those provided of could the XX-K. reminder, in uncertainties forward-looking contains obligation risks this due statements. including a to statements expectations and certain filed forward-looking The based and forward-looking risks no detailed and materially variety company's XX-Q factors, recently a undertakes most to the update the to Forms company

release include EBITDA, adjusted to adjusted of today non-GAAP EBITDA which to remarks net measure. references a our for income. reconciliation a Our earnings is Please see

release earnings call this at be Today's website, company's available the recording investors.naturalgrocers.com. is and the of a available website on will on

the Now Kemper. I to turn call will over

Kemper Isely

us you updated quarter and Jessica, year financial key you, Thank performance, first XXXX will drivers Then highlight update our greater Rich of the Today, and and results, detail initiatives. joining good first discuss will our including on our in everyone. our Thank quarter call. an I provide results for review for afternoon, guidance. our fiscal

start very our We with fiscal strong are to the pleased year.

are geographic and highest believe experienced and our counts, trends Our categories transaction X first in broad-based many quarter basket. has items results retail. Moreover, the across remained and the metrics over per We sales the growth transaction product grocery we past between continuation saw positive performance accelerating of growth comparable including balanced among growth of size that store years, regions.

X.X% first sales XX.X% comparable increase and X-year basis. accelerated store was average daily for the to on a quarter, Our

per positive of and Additionally, increase items consecutive in both count quarters comps have had X and X basket modest quarters consecutive with transaction an we inflation.

differentiated offering. growth continued recent our supported and expectation are in by growth sales for years sales Our

increasingly for are sustainability, prioritizing creating tailwinds Consumers health support and business. our products that

compelling high-quality Our marketplace. that increase products combined offering customers recognize, a of leverage at year-over-year Robust earnings a in significant distinctive with sales effective the per diluted drove affordable is and share. generated balanced XX.X% and growth, prices value proposition creates management, expense operating always within

We fiscal and our close driving with existing will brand believe our benefit rewards customer beyond program, our development trends, store growth Natural products, expansion engagement the in XXXX productivity. strong of from {N}power alignment consumer new through Grocers store and

a of positive engagement. net first {N}power the trends from rewards ago, reflecting program up customer our penetration continued in loyalty XX% quarter, During year sales and was XX%,

Natural Grocers X.X% brand sales, products represent compelling in accounted part premium year X.X% total for ago, from quarter, prices. In products. branded products first a helped of quality by new at the our up

meet items all our and During Grocers the standards XX including and Natural of nutritional new quarter, brand that health launched high sauce, sustainability, pasta soup. varieties for organic we tomato

company. first and quarter, we Store Subsequent priority to for and to development quarter, closed the Texas. opened continues be X our During we new unit Brownsville, stores a the store in growth relocated a X stores.

to to remodel plan new open we X XXXX, X and relocate or fiscal X During X to stores stores.

that at crew we and XXXX, and food role a week, to in prioritized We pivotal Natural report. grocery company chain, health in Grocers this founded parents education play Earlier that the quality essential offering well-being. our for our XXXX Since the caring stores fiscal year and system my released products has prices, a sustainability communities. is affordable believe nutrition

as and human are. health and farmers food planet the welfare nutritionally in impact passionate way our the who prioritize and environmentally health, has raised we about sold. that positively choose this and are nation as grown, sound, offer We products, of aim We to to responsible vendors animal

that for dedicated positive a of demonstrates creating Furthermore, help value to natural financial while and organic affordable, environmental we high-quality, offering deliver impact, believe that business all and can social our stakeholders. model our success ongoing products company's

exceptional In to closing, They I and commitment to service. sustained been have would like essential our to thank customer crew success. for our execution goodXu operational their

I With our over turn discuss financial to guidance. Rich our and will that, call to results

Richard Hallé

Thank and Kemper, good you, afternoon.

and For sales X-year the quarter, on comparable net first from sales year increased period increased a $XXX.X average store million. basis. the X.X% to prior Daily XX.X% X.X% increased

comps. Our marks comparable our quarter positive customer daily This count increased eighth X.X%. transaction average consecutive with traffic

comp comparable X average the percentage an transaction product that an included cost size size of points on of daily included X transaction annualized transaction X.X%. also We items comp The approximately basket Our size per estimate increase basis. in modest inflation points. increased approximately to percentage X

an the and was with both basket this items modest increase fourth consecutive for quarter in inflation. Importantly,

growth continued be categories. to broad-based product Sales across

strongest produce. performing departments positive. dairy, Our meat dietary was The sales comp were and supplement also

expenses points, margin basis expenses. to occupancy For product Store by XX by the first points driven expenses basis cost a net reflecting increased quarter, primarily the increased in decreased higher percentage expense higher leverage. X.X% sales gross quarter, first margin. XX.X%, as leverage and compensation XX Store driven store of

XX Administrative higher to and by Chief transition. Officer costs a expenses. compensation points, of expenses Financial percentage technology as Compensation our expenses the related net basis sales increased included driven

$X.X Adjusted Net first million. earnings $XX.X increased to $X.XX to quarter. to diluted XX.X% share $XX.X EBITDA increased Operating XX.X% to and XX.X% per income million. million, income increased the in increased XX.X%

the on outstanding the including borrow available million equivalents, on facility. million balance facility. and cash to position, strong $XX.X cash $XX.X credit of Turning first and our a $X.X had flow. million credit liquidity million borrowings our to $X.X and cash in quarter sheet ended revolving in We We

primarily million new quarter, net from $X.X relocated stores. expenditures, first the we capital and in invested During

our our our for business start sales year, coupled with store execution, are to trends outlook in comparable diluted the confidence on fiscal per average Based daily growth. share. XXXX strong earnings increasing and and we fiscal

$XX prior an sales of comparable between X earnings $X.XX, average to Our X%; revised X to outlook following: diluted or store $X.XX between to and prior X our and X initiatives. store outlook growth $XX million X%, to and of expenditures and includes million $X.XX to the remodels; X% new increase share to per our compared relocations store to outlook an capital X% compared daily our openings; between growth increase $X.XX; support of

Our operating the outlook the are and current momentum reflects we both results consumer considers and experiencing quarter first trends.

Our productivity outlook includes higher the growth, our store targeted of our benefits customer proposition, on our on stores. initiatives and focused focused and marketing differentiation new operating driving value in engagement,

the sales cycle prior year at comps Our as current the we the year. in half of of outlook expectation end quarter, in strong that range comps second be the high somewhat our will while second the moderating to relatively continue in is

modest in although with of of expect year uncertainty inflation the current throughout the impact We trends, the line we tariffs. possible acknowledge

be relatively Our that anticipates margin year-over-year outlook will flat. gross

that year-over-year as expect we relatively a store of lower. will percentage be sales flat to Lastly, expenses slightly

attribute the the In closing, year. performance start affordable differentiated products at prices. strong We of with our we high-quality strong the to to fiscal business of always are our model, including relevance pleased the value proposition

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

Operator

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

muted. Scott, your line may be

Scott Mushkin

sorry about was that. Guys, muted. It

your we of question guys So left off left kind you is remarks. prepared -- how my first

amount leverage margin. of on gross You obviously rent good had a and

so you of think year strong, flat. being goes are would kind margins would as gross what on, relatively With the the be comp offsets the

Kemper Isely

Relatively flat.

mean... You

Scott Mushkin

They higher runs think move rent, the wouldn't as but through you margin I leverage improve. In other wouldn't words, it. your rate gross

Richard Hallé

see store of that we margin. an margin basis significant that is to product improvements. then was Scott, did this Yes, improvement of points Rich. cost leverage, XX percentage A for and the of in related occupancy some

to we strong lower talked be forward, the move we we end the that year. start our in as the range we as pretty as as we prior expect in will in comps Yes, will our some comps half at cycle start lower outlook, to of second

product less its So to cost. tariff I And we'll leverage. bit benefit from see obviously, impact little a potential think, and occupancy the environment store uncertainness on

a And in situation. bit so a we're of little wait-and-see

Scott Mushkin

it. Got

appropriately So you guess, is make guys it? conservative, Does how you how -- that think I sense? kind would of thinking about of are I

Richard Hallé

think a fair statement. I that's Yes,

Scott Mushkin

I was more capital actually to things Well, And think for timing movements flow -- other free cash get quarter? did we question about think I were the are on I there shorter-term that, have kind mean question I questions term. actually, I next cash of longer before some free my the there between when is some flow. on working wondering, There going the one years.

Richard Hallé

predominantly It all payable the of for was payment timing goods and accounts driven. It's and Yes. timing services.

Scott Mushkin

Okay.

Okay, that's my last one. shorter-term

longer-term margin remain strong, but in margin kind basis, business, they've assuming, a What that can't not not climb a I than probably we strong quarter. it's So at on as a a it Sprouts, comps of nearest Obviously, word you I I assume, higher you operating has look to X% and guys. competitor, a you your as been. always -- -- back think better idea, continue thinking the is why good much as the if got maybe say step

increase You X% continue of or the X% to limit Should the a your the why to -- of mind it reap {N}power, you -- benefits brands continue continue to where stay of range. again, there above branded X% that your comps product to go? shouldn't in to own penetration is can thinking say to will as rise? that And

Richard Hallé

Yes.

mean, to expansion. that to depending So we unit right, we that's expansion of a I that Obviously, will also in have that see as sales assumption. of continue on down continue it's stores, expected. I be see in some as expansion impact leverage, some I should But margins. forward, move think think damping reasonable growth we sales to some our

than on and is affordable a the point to we competition. In different competitive it that's terms of that little for of comparing lower we're are company, affordable quality focused a we pricing, product strength, priced know and bit as a story competitive and very a comps, our pricing

so that -- have impact. as have to And values, some will we continue stay true our that will to

Scott Mushkin

answer. that, the great such Okay. a I love by way,

but I talked you about is -- like then get... the to going little the X last you think do Kemper, final Are to thought Is thing, about Trying could like repetitive, more? before, think -- X that piece this to X bit possible? be is stores, that a So X? to we you

Kemper Isely

the of in think And to focused that next we've to then year, the and open hoping that I little going X more, X able this would our to be said plan, will X X pipeline stores. to year, we'll be to X. guidance, as that to we're able on we're a kind bit And be stores. do then up X forward, do we'll

Scott Mushkin

know me. all. just All don't if I the there's it's line, on right. anyone usually That's

So but I love more not say you're Florida. store really we'd to interested, it. know just appreciate to time. going in I I'm it a have one

Kemper Isely

path Scott. off little is Okay. bit right Thanks, of Florida at our a moment. the

Scott Mushkin

love has store It a you offering. I unique way much. such just price. the love so the fact I the

most say things your it's doing And If now. you that. bit, about were How the an if like I obviously, -- just you're call, I little And I of And trend something there's ours, I think right. political a friend looks healthy increased a focus is won't I But could say conference that on consulting it But a shouldn't client that. say do eating. right won't so -- to be say I say I'd that. going great. on hopefully but

Kemper Isely

it with I for be And think you. this there industry, of the will to sure. benefit be. I agree will

Scott Mushkin

Absolutely. Absolutely.

Kemper Isely

Thank right. afternoon. nice a Have All you.

Operator

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

Kemper Isely

putting We and believe position and consumer great have us category remainder the and strong be of aligned you, Bye. fiscal Thank a tailwinds, continues for Grocers the helping with joining year. Natural well day. us. for to a in to our you fuel Thank momentum that

Operator

now is conference Earnings concluded. Year XXXX Fiscal Call. The the for First Grocers attending Natural Conference Thank you Quarter

You may now disconnect.

Natural Grocers by Vitamin Cottage (NGVC) 6 Feb 252025 Q1 Earnings call transcript