Natural Grocers by Vitamin Cottage (NGVC) 21 Nov 242024 Q4 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Natural Grocers Fourth Quarter and Fiscal Year 2024 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, Vice President, Treasurer for Natural Grocers. Ms. begin. may you Thiessen,

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

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

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

to turn the Now Kemper. call I will over

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

new on modest of the contribution XX% growth. items per had and X.X% and We We and are comparable price stores. increases X-year pleased the sales in with inflation sales our growth strong included growth performance our counts particularly balanced daily in the basis. transaction, fourth from nature transaction quarter, store Sales average a

expansion in occupancy sales of we increase and driven store margin and per XXX improvements, points, with and growth earnings performance of improvement and and the including points. was cost increase in basis leverage net Furthermore, The management product comparable also average points daily delivered gross Additionally, higher of income. The diluted full XX increased balanced, sales year margin X% share basis a XX%. resulted XX% fiscal expense operating margin by combined gross of a margin margin. leverage both XXX store basis

fiscal XXXX of sales year consecutive store growth. in represented our comp positive positive Our XXst comparable

quarter commitment customers' the year underscore exceptional our Our quality, to results outstanding model. convenience our our provided innovative for value appreciation fiscal and and fourth business by

consumers We sustainability. Additionally, were product differentiated and these We we more for with year, the benefit departments and dairy merchandising fourth produce. high-quality, of products continue our supplements. In dietary that the meat, sales affordable, quarter health fiscal grocery to believe delivers standards prioritization that the from provide products a support high ever. growth consumers and and the in than strategy now organic with and natural highest resonate increasing departments

meat and Our sustainably-sourced prioritize product offerings. standards humanely-raised

antibiotics, has our other hormones promotants. of the chicken growth example, product use prohibited For always standard and

require department dairy dairy And non-confinement egg standards free Our our products. minimum range. pasture-raised standard is

is organic before and certified even was designation. Our offering an official produce XXX% organic there USDA was organic

value distinctive offering to that market. within a affordable commitment the always proposition compelling creates high-quality Our at is prices products

We believe quarters. several engagement. communicating distinct has consistently marketplace in over key that position sales customer generating strong in the characteristics the initiatives instrumental to reinforcing marketing Our and these past our drive performance emphasize our been

sustained customer engagement growth reflect on operational have we performance longer upon focusing our and we a founding our As horizon, consistently over achieved principles by and executing initiatives.

from benefited and have favorable Additionally, consumer we trends. category

to representing to in and have a $X.XX share. diluted our X on returned this Directors by during stockholders, grown than We Board capital of announced net has our increasing cumulative dividend quarterly XX% Furthermore, growth. per more million to take per earnings increase. with capital balanced previous period, focus per the returning $XXX Consistent great our of dividends XX% through approved common stockholders that cash we years, pride common in our we sales Over sustained share, we today, and our tripled our share. $X.XX

update now our continue in believe fiscal opportunities on for the provide future. Turning growth to an in key and business. initiatives priorities to XXXX We will drove that growth our

We program, sales as XX%, quarter has leverage year reflected a rewards from net to customer {N}power in continue fourth increasing loyalty ago. our tool effective up of and the {N}power an been XX% penetration engagement. for

products the in elevated branded Grocers growth Natural Our quarter. continue experience fourth to

Our of up from year total branded X.X% sales, X.X% accounted for products a ago.

Grocers frozen edition line, Natural pizza. organic products limited flavors the our gourmet we brand varieties added items, of of our household launched quarter, During XX coffee, new expanded and including new

products, compelling prices. Store new be launched Grocers development premium company. XX growth continues and Natural brand our For our a products, year, for represent the priority unit which, like all at we quality to

During the Nevada, is store in quarter, Tahoe in which Incline Lake the fourth opened a we region. Village,

fiscal relocated a remodeled XXXX, During of opened total we new stores X stores. X and or

early Subsequent to relocated X with end, pleased performance. their X are closed We store. the stores and quarter we

are thank excellence customer X years, several to and crew, their construction subject we were instrumental would strong and opening improving goodXu to stores year, our driving to next and X between new opportunities per service our real results. commitment closing, in I estate like to a return the targeting exceptional conditions. In Over operational

operations principles stores, are that values. these are ensuring We for supply have share crew our reflect an founding dedicated to fortunate who and affinity chain and our to

of supported Our record our significant fiscal the award crew. earnings for incentives goodXu discretionary XXXX in

reflects of organization call to I Todd our history and to our incentives to driving that, turn discuss company's and growth the crew. With to in the unites our results discretionary over will paying our Our profitable commitment financial tied guidance. performance

afternoon. Thank Kemper, you, good and

financial our strong quarter, with fourth year. consistent results, the trends the During generated throughout we

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

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

daily comparable transaction increase basket size percentage included Our X.X%. The items transaction X per of comp average in an size increased approximately points.

The per increase basket. major product Every transaction inflation of category comp in growth be cost Importantly, categories. increase approximately X size to product continued an had also items included basket. this the items consecutive third an broad-based percentage point. Sales per quarter was product with across in

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

leverage. the margin gross long-lived charges, points product primarily basis in higher XXX share, increased a Store asset million. quarter, million with diluted XX% impairment was reflecting a by per and XX.X%, net $X basis compensation occupancy sales in expenses results. fourth by closure. year. increased expenses or decreased $X.X the impairment Net store increased higher last income offset to the of XX as quarter charges For of of primarily on to share long-lived by XX income a the earnings margin. Store leverage fourth diluted percentage store higher cost basis increased driven XX.X% driven the sales as $X.XX $XX.X This expenses related by million, quarter, percentage expenses asset XX% of to full Adjusted touching points, driven the and expense increased Administrative partially quarter. Briefly fourth per million $X.XX quarter. earnings in expense $XX.X to year of income EBITDA compares leverage. Operating of to fourth in fourth points

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

Store the XX sales year prior as leverage. store on reflects resulting basis a average sales XX.X% year. XX expenses of daily in and basis was expense basis. a primarily the of increase prior comparable margin Gross points X-year X%, percentage lower an higher than were than was growth Our points

For compared fiscal $X.XX Adjusted million. EBITDA fiscal fiscal XXXX diluted $XX.X were XXXX, to $X.XX, was share in per XXXX. earnings in

outstanding and Turning the cash no million $X.X sheet and and ended $XX a revolving balance equivalents of in cash to We liquidity cash the our credit million strong borrowings flow. quarter fourth position, facility. including on

December flow $XX.X operations increased that from $XX.X on share. of resulting Board invested future returning per financial we cash our of our the record XXXX. our we million announced The dividend is expenditures, stockholders During common quarterly new primarily on $XX.X and This free our cash of of enhancing all relocated performance with reflects fiscal of stockholder to stores, for capital. million close Directors confidence strong at net XXXX, will million. Today, operating objective $X.XX XX, from has and by position, value X, capital XXXX, to cash in be $X.XX consistent in December generated dividend and business increase paid our and in of

company's of upon current as consumer momentum like which the as operating we experiencing, to would the the trends, uncertainty based outlook, consideration the environment. of I Now was well developed are review economic

X diluted million $X.XX, support and growth For to to open capital X fiscal or stores, achieve new X share million relocate towards initiatives. $X.XX to and our sales stores, to X X%, between XXXX, comparable average growth between $XX store we and earnings per direct to expenditures remodel expect daily $XX X% achieve

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

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

We expect trends. the in with modest line current throughout inflation year

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

quarter year. program, our customer existing Lastly, percentage opportunity rewards expenses of growth will closing, to we record-setting expect a development we Grocers store we through and the alignment and that of store slightly products, relatively to branded productivity. In flat have sales believe from a XXXX consumer lower. Considering store new fiscal year-over-year driving strong for strong {N}power we a expansion our as beyond, engagement be with trends, Natural had conclude fiscal

We value turn back continue stakeholders. With are confident growth drive in to that, and profitable for enhance our ability call all to to I Kemper. our

in and to to Rich's transition. our well enhancing welcome of Since executive we since been his our member founding through I announced background In of Todd, end CFO Todd. executive invaluable a June, helping Grocers served contributions retirement. XXXX. want Directors his achieving Natural for many company in team, executive Todd makes Natural success at Audit strong X as a retire team. Todd wish you, Todd you and XXXX, year. the strategic to our late Halle successful Grocers execute our CFO principles. your role is the fit appointment ideal to Board year-end deep the finance the an a intention Thank ensure into the of I'm performance to as to seasoned as our Richard to to and on continue him Committee has in record as January to shareholder of financial principles you execute founding who knowledge and will thank to value. Stepping CFO member Rich role while continue thrilled of our

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

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

think. Todd, and congratulations I'm jealous, on I retirement

So tougher, since they've that commented one seen talking get you short comps guess I maybe I'll into wanted to November. in just like guys kind that I I off acceleration September, same kind they're continuous -- mean, of the acceleration, I start I I of the I of but competitors little term, mean, that you but are guess a -- business? are way, hate know seeing your October, the seeing

off their for a year we but Well, [ ours. lower we comp in were it's was -- give the similar how previous in comp ] acceleration really we did don't very our to throughout quarter the good it, But October. than

Okay, that's performance, say Sticking in competing I'd markets, whether at you of Sprouts with Sprouts? with guys competing the store in theme, not in type good or overlap difference this with do you market, any down in least of -- but color. Texas, also well, Colorado you're number see a

our is store wherever now really. -- even and of in stronger one pretty Not is we're performance area. They markets right throughout I down located. Arizona, our Tucson Phoenix mean,

that's headquarters' So areas. their

pretty -- so... is Texas too strong right actually now, Just

industry? input think the do burns helping you keep weight-loss that's then, you that going how you it longer, on are the industry in that don't while your would part you can the much after And that. it's you that, to get a put some of credence do maybe Or put has think idea on? if these the thinking think drugs, if on don't to with But acceleration of know Kemper, Okay. I like what's again, I that. you any out propel into going

I have. people that somewhat mean are into effect don't the I standpoint might their of body. what they're be putting really having aware just from think of they the drugs No, more weight-loss an

-- I they less likely customers because the solve overall just rather they're that's the people for actually their without throughout So be weight-loss an good weight business. actually of think about something they our than drug. to are on more sort worried the people of thing underlying what our addressing that But country that think to probably the what cause of consuming that's are are weight gain I want weight-loss just is. want the problem

then so And keep don't is, there off. figured you I'll anyone know unless the else them I'll throwing and do get how to I Right. questions, if view out just there's here -- ask I

No, we're good.

We're good.

Okay.

person additives out? obviously, So conference of you say about, plays of help He stuff or Health think successful, a how nominated. you how hurt poison and I very that If you do on think does Services some I you? kind shouldn't that is that maybe Human there's he's think it is But & the mean, call. I against do food but --

the player It in would actual bodies reaffirmed that just we authentic be because succeeds original of stores aware allowing additives if authentic putting field artificial they're the we're foods. that into sell of more natural he story products not that making people and of we're into in their in it an food we so the helpful have our that what

Yes.

was Okay. it. sense. Yes, I to makes frame trying that

mean draws helps. you more degree more to to I obviously that I what helps. think attention he I it agree just the with said. I and it, think

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amazing. it's Yes,

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super the the that and you colors then put they and hyperactive. the for and kids, have artificial become into flavors Yes, they candies

And the plastics.

of And Yes, all the plastics. them.

Astonishing.

guys have -- in? you do allowed do do are plastic? right? you I you Or You -- guys plastics allow think don't have -- so, you

No, plastics into allow we foods. don't the

We bit. right. digressed little a just All Okay.

at you excited some for going of if you you're over -- want initiatives if 'XX, So you're at to top something the like if guess was company. look this on also maybe a efficiency But things 'XX, the for over went the you're side, for hey, the really going drive about. I Kemper, revenue to the but is look looking I side, that at 'XX, like, especially focus

our as on to as just market. revenue focused really we're far that's Well, driving is the customers because way to {N}power cost-effective most us marketing for

getting our percentage so -- as {N}power line effective in up base of our of a salespeople sales. percentage higher even super of the driving is signed a customer higher And top members

XX% if from that from so XX% we can And we XX%. drive -- to went

more a of members a a tremendous transaction lot about per from So just telling XX% because benefits, spend X would we their sales. mean other be customers them and I do Because we're that them {N}power to go this can all driver good marketing times week... to just XX% year, of than

to had from most -- the is it that sign Is it engaging how people? like just -- getting had get had the positive the your we with XX%? in Is And up And -- are tremendous that We sign XX% does I, We consulting my RX. people we just who interaction store. it it she was most to just so like the how efforts a is us Texas. cashier actually, And Anyway. partner actually in get actually the were lot with you to for done? and the were of Keller, -- you're associates who up. just

have -- contest then we're running region. And each in-store Exactly. friendly in we

a So stores, a things a once sign drive the see in most quarter to {N}power run quarter, the we and sign-ups. up to store can just that, just like contest which the members

And of in you promotions. the be need program to advantage take to

the at the you're your program. get can't you mean I good Yes. price unless eggs {N}power really in

and again a So eggs be egg there's to an driver seem shortage because again. --

annual see both got a to were I was. you guys engaged was were, running this but I that And unfortunately, to the bit we -- interaction, definitely it going amazing. That's weren't it with was to big a or was, it ago, how impressed weren't. was we sale forget like that it, were tell we you, your a that, employee what think was something bummed I kind for I be there -- we but of

Natural you, open I Florida. here told I ever think in a going down to But when said that's you you no. Grocers are

Not right now.

now... right Not

We do Mississippi. still the have to of lot fill west a

you the nearly Yes, not or not there does someone but as as good. All a that's they're nearly right, they're here, down think good as I but is thing, it. competitor same that

I that's company well. it. the Thanks stock. think And nice the dividend. I for for it I own appreciate so see it's the doing to me.

So I appreciate it.

No, given the dollars a few a you're bit welcome. quite dividends last years. I mean few -- back in over quite

So yes.

the that's disclosures. thing we in our -- having can it's one a Yes, company, actually smaller of good

this actually print, put is. will in where our probably we mouth So be but can our money

appreciate So it.

We you. Thank coverage. appreciate your

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

XXXX thank our been you take pride had fourth Isely. never great discuss past We us growth several years. quarter I sustained for in results. and balanced to and our over joining in Kempler fiscal the called Anyway,

we value to We our year look stockholders to maximizing forward XXXX. are as fiscal for committed

excellence company. Thank growth differentiated by an a founding have model executing our great Bye. to authentic We emphasizing at to principles, and our day. ] expect operational and profitable to our you, [ build upon leveraging momentum drive