Natural Grocers by Vitamin Cottage Announces Second Quarter Fiscal 2024 Results
Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) announced its second quarter fiscal 2024 results, showing an 8.8% increase in net sales to $308.1 million, daily average comparable store sales growth of 7.5%, net income of $8.0 million with diluted earnings per share of $0.35, and an adjusted EBITDA of $19.7 million. The company opened one new store and raised its fiscal 2024 outlook for daily average comparable store sales growth and diluted earnings per share due to strong sales growth, effective expense management, and operational leverage.
Net sales increased by 8.8% to $308.1 million in the second quarter fiscal 2024.
Daily average comparable store sales grew by 7.5% in the second quarter fiscal 2024.
Net income was $8.0 million with diluted earnings per share of $0.35 in the second quarter fiscal 2024.
Adjusted EBITDA reached $19.7 million in the second quarter fiscal 2024.
The company opened one new store during the quarter.
The gross profit increased by 9.6% to $90.4 million in the second quarter fiscal 2024.
Administrative expenses as a percentage of net sales increased to 3.1% in the second quarter fiscal 2024.
The increase in store expenses during the second quarter fiscal 2024 was primarily driven by higher compensation expenses.
Insights
Raises Fiscal 2024 Outlook
Highlights for Second Quarter Fiscal 2024 Compared to Second Quarter Fiscal 2023
- Net sales increased
8.8% to$308.1 million - Daily average comparable store sales increased
7.5% , and increased10.2% on a two-year basis; - Net income was
$8.0 million $0.35 - Adjusted EBITDA was
$19.7 million - Opened one new store.
"Second quarter results were outstanding as we delivered record quarterly sales, margin expansion, and significant earnings growth. Daily average comparable store sales accelerated to
Mr. Isely continued, "Strong sales growth, combined with effective expense management, generated operating leverage and drove a
In addition to presenting the financial results of Natural Grocers by Vitamin Cottage, Inc. and its subsidiaries (collectively, the Company) in conformity with
Operating Results — Second Quarter Fiscal 2024 Compared to Second Quarter Fiscal 2023
During the second quarter of fiscal 2024, net sales increased
Gross profit during the second quarter of fiscal 2024 increased
Store expenses during the second quarter of fiscal 2024 increased
Administrative expenses during the second quarter of fiscal 2024 increased
Operating income for the second quarter of fiscal 2024 was
Net income for the second quarter of fiscal 2024 was
Adjusted EBITDA for the second quarter of fiscal 2024 was
Operating Results — First Six Months Fiscal 2024 Compared to First Six Months Fiscal 2023
During the first six months of fiscal 2024, net sales increased
Gross profit during the first six months of fiscal 2024 increased
Store expenses during the first six months of fiscal 2024 increased
Administrative expenses during the first six months of fiscal 2024 increased
Operating income for the first six months of fiscal 2024 was
Net income for the first six months of fiscal 2024 was
Adjusted EBITDA for the first six months of fiscal 2024 was
Balance Sheet and Cash Flow
As of March 31, 2024, the Company had
During the first six months of fiscal 2024, the Company generated
Dividend Announcement
Today, the Company announced the declaration of a quarterly cash dividend of
Growth and Development
During the second quarter of fiscal 2024, the Company opened one store, ending the quarter with a total of 168 stores in 21 states.
Fiscal 2024 Outlook
The Company is raising its fiscal 2024 outlook for daily average comparable store sales growth and diluted earnings per share. The Company is otherwise confirming its previously announced outlook for fiscal 2024. The Company now expects:
Fiscal | |
Number of new stores | 4 to 6 |
Number of relocations/remodels | 4 to 6 |
Daily average comparable store sales growth | |
Diluted earnings per share | |
Capital expenditures (in millions) |
Earnings Conference Call
The Company will host a conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) to discuss this earnings release. The dial-in number is 1-888-347-6606 (US) or 1-412-902-4289 (International). The conference ID is "Natural Grocers Q2 FY 2024 Earnings Call." A simultaneous audio webcast will be available at http://Investors.NaturalGrocers.com and archived for a minimum of 20 days.
About Natural Grocers by Vitamin Cottage
Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) is an expanding specialty retailer of natural and organic groceries, body care products and dietary supplements. The products sold by Natural Grocers must meet strict quality guidelines and may not contain artificial colors, flavors, preservatives or sweeteners, or partially hydrogenated or hydrogenated oils. The Company sells only USDA certified organic produce and exclusively pasture-raised, non-confinement dairy products, and free-range eggs. Natural Grocers' flexible smaller-store format allows it to offer affordable prices in a shopper-friendly, clean and convenient retail environment. The Company also provides extensive free science-based nutrition education programs to help customers make informed health and nutrition choices. The Company, founded in 1955, has 168 stores in 21 states.
Visit www.NaturalGrocers.com for more information and store locations.
Forward-Looking Statements
The following constitutes a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, statements in this release are "forward-looking statements" and are based on management's current expectations and are subject to uncertainty and changes in circumstances. All statements that are not statements of historical fact are forward-looking statements. Actual results could differ materially from these expectations due to changes in global, national, regional or local political, economic, inflationary, deflationary, recessionary, business, interest rate, labor market, competitive, market, regulatory and other factors, and other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the Form 10-K) and the Company's subsequent quarterly reports on Form 10-Q. The information contained herein speaks only as of the date of this release and the Company undertakes no obligation to publicly update forward-looking statements, except as may be required by the securities laws.
For further information regarding risks and uncertainties associated with the Company's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Form 10-K and the Company's subsequent quarterly reports on Form 10-Q, copies of which may be obtained by contacting Investor Relations at 303-986-4600 or by visiting the Company's website at http://Investors.NaturalGrocers.com.
Investor Contact:
Reed Anderson, ICR, 646-277-1260, reed.anderson@icrinc.com
NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data) | ||||||||||
Three months ended | Six months ended | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Net sales | $ | 308,092 | 283,245 | 609,842 | 563,702 | |||||
Cost of goods sold and occupancy costs | 217,735 | 200,768 | 430,725 | 402,506 | ||||||
Gross profit | 90,357 | 82,477 | 179,117 | 161,196 | ||||||
Store expenses | 69,204 | 65,192 | 137,216 | 128,788 | ||||||
Administrative expenses | 9,522 | 8,605 | 18,929 | 16,858 | ||||||
Pre-opening expenses | 370 | 249 | 908 | 702 | ||||||
Operating income | 11,261 | 8,431 | 22,064 | 14,848 | ||||||
Interest expense, net | (1,177) | (834) | (2,071) | (1,630) | ||||||
Income before income taxes | 10,084 | 7,597 | 19,993 | 13,218 | ||||||
Provision for income taxes | (2,123) | (1,713) | (4,277) | (2,927) | ||||||
Net income | $ | 7,961 | 5,884 | 15,716 | 10,291 | |||||
Net income per share of common stock: | ||||||||||
Basic | $ | 0.35 | 0.26 | 0.69 | 0.45 | |||||
Diluted | $ | 0.35 | 0.26 | 0.68 | 0.45 | |||||
Weighted average number of shares of common stock outstanding: | ||||||||||
Basic | 22,759,131 | 22,725,462 | 22,755,307 | 22,716,880 | ||||||
Diluted | 23,061,119 | 22,824,673 | 23,015,842 | 22,809,189 | ||||||
NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Balance Sheets (Unaudited) (Dollars in thousands, except per share data) | ||||||
March 31, 2024 | September 30, | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 10,970 | 18,342 | |||
Accounts receivable, net | 8,741 | 10,797 | ||||
Merchandise inventory | 117,352 | 119,260 | ||||
Prepaid expenses and other current assets | 3,806 | 4,151 | ||||
Total current assets | 140,869 | 152,550 | ||||
Property and equipment, net | 178,339 | 169,060 | ||||
Other assets: | ||||||
Operating lease assets, net | 280,165 | 287,941 | ||||
Finance lease assets, net | 42,908 | 45,110 | ||||
Deposits and other assets | 288 | 395 | ||||
Goodwill and other intangible assets, net | 14,002 | 14,129 | ||||
Total other assets | 337,363 | 347,575 | ||||
Total assets | $ | 656,571 | 669,185 | |||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 84,176 | 80,675 | |||
Accrued expenses | 32,312 | 33,064 | ||||
Term loan facility, current portion | 3,688 | 1,750 | ||||
Operating lease obligations, current portion | 35,859 | 34,850 | ||||
Finance lease obligations, current portion | 3,860 | 3,690 | ||||
Total current liabilities | 159,895 | 154,029 | ||||
Long-term liabilities: | ||||||
Term loan facility, net of current portion | — | 5,938 | ||||
Revolving facility | 11,400 | — | ||||
Operating lease obligations, net of current portion | 267,293 | 276,808 | ||||
Finance lease obligations, net of current portion | 45,220 | 47,142 | ||||
Deferred income tax liabilities, net | 12,789 | 14,427 | ||||
Total long-term liabilities | 336,702 | 344,315 | ||||
Total liabilities | 496,597 | 498,344 | ||||
Stockholders' equity: | ||||||
Common stock, 22,745,412 shares issued at March 31, 2024 and September 30, 2023, respectively, and 22,771,969 and 22,738,915 shares outstanding at March 31, 2024 and September 30, 2023, respectively | 23 | 23 | ||||
Additional paid-in capital | 59,706 | 59,013 | ||||
Retained earnings | 100,245 | 111,871 | ||||
Common stock in treasury at cost, 6,497 shares at September 30, 2023 | — | (66) | ||||
Total stockholders' equity | 159,974 | 170,841 | ||||
Total liabilities and stockholders' equity | $ | 656,571 | 669,185 | |||
NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) | ||||||
Six months ended March 31, | ||||||
2024 | 2023 | |||||
Operating activities: | ||||||
Net income | $ | 15,716 | 10,291 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 15,153 | 14,216 | ||||
(Gain) loss on impairment of long-lived assets and store closures | (3) | 871 | ||||
Loss on disposal of property and equipment | 30 | 3 | ||||
Share-based compensation | 838 | 713 | ||||
Deferred income tax (benefit) expense | (1,639) | 149 | ||||
Non-cash interest expense | 9 | 9 | ||||
Changes in operating assets and liabilities: | ||||||
Decrease (increase) in: | ||||||
Accounts receivable, net | 1,358 | 3,358 | ||||
Merchandise inventory | 1,908 | (2,297) | ||||
Prepaid expenses and other assets | 423 | 373 | ||||
Income tax receivable | 30 | 166 | ||||
Operating lease assets | 16,661 | 16,406 | ||||
(Decrease) increase in: | ||||||
Operating lease liabilities | (16,768) | (16,940) | ||||
Accounts payable | 3,883 | 9,270 | ||||
Accrued expenses | (752) | (1,731) | ||||
Net cash provided by operating activities | 36,847 | 34,857 | ||||
Investing activities: | ||||||
Acquisition of property and equipment | (22,183) | (16,978) | ||||
Acquisition of other intangibles | (371) | (859) | ||||
Proceeds from sale of property and equipment | 3 | 72 | ||||
Proceeds from property insurance settlements | 41 | — | ||||
Net cash used in investing activities | (22,510) | (17,765) | ||||
Financing activities: | ||||||
Borrowings under revolving facility | 293,800 | 246,500 | ||||
Repayments under revolving facility | (282,400) | (246,500) | ||||
Repayments under term loan facility | (4,000) | (4,000) | ||||
Finance lease obligation payments | (1,706) | (1,357) | ||||
Dividends to shareholders | (27,306) | (4,543) | ||||
Payments of deferred financing costs | (18) | — | ||||
Repurchase of common stock | — | (86) | ||||
Payments on withholding tax for restricted stock unit vesting | (79) | (180) | ||||
Net cash used in financing activities | (21,709) | (10,166) | ||||
Net (decrease) increase in cash and cash equivalents | (7,372) | 6,926 | ||||
Cash and cash equivalents, beginning of period | 18,342 | 12,039 | ||||
Cash and cash equivalents, end of period | $ | 10,970 | 18,965 | |||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest | $ | 989 | 639 | |||
Cash paid for interest on finance lease obligations, net of capitalized interest of and | 961 | 1,005 | ||||
Income taxes paid | 6,466 | 2,625 | ||||
Supplemental disclosures of non-cash investing and financing activities: | ||||||
Acquisition of property and equipment not yet paid | $ | 5,353 | 2,033 | |||
Acquisition of other intangibles not yet paid | 283 | 103 | ||||
Property acquired through operating lease obligations | 9,432 | 756 | ||||
Property acquired through finance lease obligations | (45) | 1,652 | ||||
NATURAL GROCERS BY VITAMIN COTTAGE, INC. |
Non-GAAP Financial Measures |
(Unaudited) |
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP. We define EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company's actual operating performance, including certain items such as impairment charges, store closing costs, share-based compensation and non-recurring items.
The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands:
Three months ended | Six months ended | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Net income | $ | 7,961 | 5,884 | 15,716 | 10,291 | |||||
Interest expense, net | 1,177 | 834 | 2,071 | 1,630 | ||||||
Provision for income taxes | 2,123 | 1,713 | 4,277 | 2,927 | ||||||
Depreciation and amortization | 7,702 | 7,154 | 15,153 | 14,216 | ||||||
EBITDA | 18,963 | 15,585 | 37,217 | 29,064 | ||||||
Impairment of long-lived assets and store closing costs | 335 | 871 | 424 | 871 | ||||||
Share-based compensation | 432 | 356 | 838 | 713 | ||||||
Adjusted EBITDA | $ | 19,730 | 16,812 | 38,479 | 30,648 | |||||
EBITDA increased
Adjusted EBITDA increased
Management believes some investors' understanding of our performance is enhanced by including EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe EBITDA and Adjusted EBITDA provide additional information about: (i) our operating performance, because they assist us in comparing the operating performance of our stores on a consistent basis, as they remove the impact of non-cash depreciation and amortization expense as well as items not directly resulting from our core operations, such as interest expense and income taxes and (ii) our performance and the effectiveness of our operational strategies. Additionally, EBITDA is a component of a measure in our financial covenants under our credit facility.
Furthermore, management believes some investors use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry. Management believes that some investors' understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. By providing these non-GAAP financial measures, together with a reconciliation from net income, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
Our competitors may define EBITDA and Adjusted EBITDA differently, and as a result, our measures of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA of other companies. Items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered in isolation or as an alternative to, or substitute for, net income or other financial statement data presented in the consolidated financial statements as indicators of financial performance. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:
- EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
- EBITDA and Adjusted EBITDA do not reflect any depreciation or interest expense for leases classified as finance leases;
- EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
- Adjusted EBITDA does not reflect share-based compensation, impairment charges, and store closing costs;
- EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA as supplemental information.
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SOURCE Natural Grocers by Vitamin Cottage, Inc.
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