Core Viewpoint - Natural Grocers by Vitamin Cottage, Inc. reported strong third-quarter results for fiscal 2025, leading to an increase in its fiscal outlook for daily average comparable store sales growth and diluted earnings per share [2][19]. Financial Performance - Net sales for the third quarter of fiscal 2025 increased by $19.6 million, or 6.3%, to $328.7 million compared to the same period in fiscal 2024, driven by a $19.0 million increase in comparable store sales [3][7]. - Daily average comparable store sales grew by 7.4%, with a 4.8% increase in daily average transaction count and a 2.4% increase in daily average transaction size [3]. - Net income rose by 26.0% to $11.6 million, resulting in diluted earnings per share of $0.50, compared to $9.2 million and $0.40 per share in the third quarter of fiscal 2024 [8][7]. Operating Results - Gross profit for the third quarter increased by $7.9 million, or 8.8%, to $98.3 million, with a gross margin of 29.9%, up from 29.2% in the prior year [4]. - Operating income increased by 21.3% to $15.6 million, with an operating margin of 4.7%, compared to 4.2% in the third quarter of fiscal 2024 [8]. - Adjusted EBITDA for the third quarter was $24.4 million, a 10.1% increase from $22.2 million in the same quarter of fiscal 2024 [9][34]. Expense Management - Store expenses rose by 6.1% to $71.7 million, but as a percentage of net sales, they decreased to 21.8% from 21.9% in the prior year, indicating expense leverage [5]. - Administrative expenses increased by 14.7% to $10.9 million, with a rise in technology and compensation costs, leading to an increase in administrative expenses as a percentage of net sales to 3.3% from 3.1% [6][12]. Outlook - The company raised its fiscal 2025 outlook for daily average comparable store sales growth to a range of 7.25% to 7.75% and diluted earnings per share to $1.90 to $1.95 [19]. - The updated outlook for the number of new stores is now 2, down from a previous estimate of 3 to 4, while the number of relocations/remodels is updated to 3 [19]. Balance Sheet and Cash Flow - As of June 30, 2025, the company had $13.2 million in cash and cash equivalents, with no outstanding borrowings on its $72.5 million revolving credit facility [16]. - The company generated $39.7 million in cash from operations during the first nine months of fiscal 2025 [16]. Growth and Development - The company ended the third quarter with 169 stores across 21 states and has remodeled one store since June 30, 2025 [18].

PART I. Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and equity changes, are presented with detailed accounting notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) **Consolidated Balance Sheet Highlights (Dollars in thousands):** | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------- | :-------------- | :----------------- | | Total Assets | $658,997 | $655,476 | | Total Liabilities | $456,496 | $481,222 | | Total Stockholders' Equity | $202,501 | $174,254 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) **Consolidated Statements of Income Highlights (Dollars in thousands, except per share data):** | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $328,705 | $309,082 | $994,695 | $918,924 | | Gross profit | $98,279 | $90,331 | $298,851 | $269,448 | | Operating income | $15,587 | $12,847 | $46,488 | $34,911 | | Net income | $11,605 | $9,209 | $34,644 | $24,925 | | Basic EPS | $0.51 | $0.40 | $1.51 | $1.09 | | Diluted EPS | $0.50 | $0.40 | $1.49 | $1.08 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Consolidated Statements of Cash Flows Highlights (Nine months ended June 30, Dollars in thousands):** | Metric | 2025 | 2024 | | :------------------------------------------ | :------- | :------- | | Net cash provided by operating activities | $39,677 | $49,280 | | Net cash used in investing activities | $(22,942) | $(31,808) | | Net cash used in financing activities | $(12,428) | $(21,899) | | Net increase (decrease) in cash and cash equivalents | $4,307 | $(4,427) | | Cash and cash equivalents, end of period | $13,178 | $13,915 | [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) **Total Stockholders' Equity (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $202,501 | | September 30, 2024 | $174,254 | [Notes to Unaudited Interim Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) [1. Organization](index=10&type=section&id=Note%201.%20Organization) Natural Grocers operates 169 retail stores across 21 states, specializing in natural and organic products - Operates **169 stores** in **21 states** as of June 30, 2025[26](index=26&type=chunk) - Specializes in natural and organic groceries, dietary supplements, and body care products[26](index=26&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements adhere to GAAP, with the company operating as a single segment, adopting recent ASUs without material impact - Financial statements prepared in accordance with U.S. GAAP for interim statements[27](index=27&type=chunk) - Company has a single reporting segment: natural and organic retail stores[29](index=29&type=chunk) - Adopted ASU 2023-01 (Common Control Arrangements) and ASU 2016-13 (Credit Losses) with no material impact[31](index=31&type=chunk)[32](index=32&type=chunk) - Evaluating impact of ASU 2023-07 (Segment Disclosures), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03 (Income Statement Expense Disaggregation) for future periods[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [3. Revenue Recognition](index=11&type=section&id=Note%203.%20Revenue%20Recognition) Revenue is recognized at point of sale; gift cards and rewards are liabilities, with grocery sales as the largest segment - Revenue recognized at point of sale when control of goods is transferred[37](index=37&type=chunk)[38](index=38&type=chunk) - Gift card proceeds recorded as liability until redemption[39](index=39&type=chunk) **Contract Liabilities for Unredeemed Gift Cards (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $1,700 | | September 30, 2024 | $1,500 | **Revenue by Product Category (Three months ended June 30, Dollars in thousands):** | Category | 2025 Amount | 2025 % of Net Sales | 2024 Amount | 2024 % of Net Sales | | :-------------------------- | :---------- | :------------------ | :---------- | :------------------ | | Grocery | $235,286 | 72% | $219,040 | 71% | | Dietary supplements | $61,988 | 19% | $59,966 | 19% | | Body care, pet care and other | $31,431 | 9% | $30,076 | 10% | | **Total** | **$328,705** | **100%** | **$309,082** | **100%** | [4. Earnings Per Share](index=12&type=section&id=Note%204.%20Earnings%20Per%20Share) Basic EPS uses weighted average shares, while diluted EPS includes potential dilution from unvested restricted stock units **Earnings Per Share (EPS) (Dollars in thousands, except per share data):** | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $11,605 | $9,209 | $34,644 | $24,925 | | Basic EPS | $0.51 | $0.40 | $1.51 | $1.09 | | Diluted EPS | $0.50 | $0.40 | $1.49 | $1.08 | [5. Debt](index=13&type=section&id=Note%205.%20Debt) The $72.5 million credit facility, amended in November 2023, has no outstanding loans and includes dividend restrictions - Credit Facility aggregate revolving commitment: **$72.5 million** as of June 30, 2025[44](index=44&type=chunk) - No revolving loan amounts outstanding under the Credit Facility as of June 30, 2025 and September 30, 2024[47](index=47&type=chunk) **Available for Borrowing under Credit Facility (Dollars in millions):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $69.5 | | September 30, 2024 | $72.8 | - Credit Facility amended in November 2023 to increase revolving commitments to **$75.0 million** and extend maturity to November 16, 2028[46](index=46&type=chunk) - Company was in compliance with all covenants under the Credit Facility as of June 30, 2025 and September 30, 2024[48](index=48&type=chunk) **Gross Interest Expense (Dollars in thousands):** | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three months ended June 30 | $800 | $1,200 | | Nine months ended June 30 | $2,500 | $3,400 | [6. Stockholders' Equity](index=15&type=section&id=Note%206.%20Stockholders'%20Equity) Share repurchase program extended to May 2026 with $8.1 million remaining; quarterly dividends increased, and a special dividend was paid - Share repurchase program extended to May 31, 2026, with **$8.1 million** remaining[52](index=52&type=chunk) - No share repurchases during the three and nine months ended June 30, 2025 and 2024[53](index=53&type=chunk) - Quarterly cash dividend: **$0.12 per share** in FY2025, up from **$0.10 per share** in FY2024[54](index=54&type=chunk) - Special cash dividend of **$1.00 per share** paid in the first quarter of fiscal year 2024[54](index=54&type=chunk) - Accelerated vesting of restricted stock units for former CFO resulted in **$0.5 million** incremental share-based compensation expense[55](index=55&type=chunk) [7. Leases](index=15&type=section&id=Note%207.%20Leases) The Company leases most stores and facilities, classifying them as operating or finance leases, with related party leases totaling $8.6 million in assets - Leases most of its stores, a bulk food repackaging facility, and administrative offices[56](index=56&type=chunk) - Lease terms generally range from **10 to 25 years**, with renewal options typically in **5 to 10-year increments**[56](index=56&type=chunk)[58](index=58&type=chunk) - Related party operating leases with Chalet Properties, LLC, Isely Family Land Trust LLC, and FTVC, LLC[65](index=65&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) **Related Party Operating Leases (Dollars in thousands):** | Metric | June 30, 2025 | | :-------------------------- | :-------------- | | Operating lease assets | $8,600 | | Operating lease liabilities | $8,800 | **Total Lease Cost (Dollars in thousands):** | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three months ended June 30 | $15,654 | $15,400 | | Nine months ended June 30 | $46,543 | $46,129 | **Weighted-Average Remaining Lease Term (in years):** | Lease Type | June 30, 2025 | September 30, 2024 | | :-------------------- | :-------------- | :----------------- | | Operating leases | 9.4 | 9.8 | | Finance leases | 14.0 | 13.7 | **Future Undiscounted Lease Payments (Dollars in thousands):** | Lease Type | Total Future Undiscounted Lease Payments | | :-------------------- | :------------------------------------- | | Operating leases | $350,074 | | Finance leases | $65,997 | [8. Property and Equipment](index=18&type=section&id=Note%208.%20Property%20and%20Equipment) Net property and equipment increased to $181.0 million as of June 30, 2025, with total depreciation and amortization expense at $23.8 million **Property and Equipment, Net (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $181,037 | | September 30, 2024 | $178,609 | **Total Depreciation and Amortization Expense (Dollars in thousands):** | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three months ended June 30 | $7,953 | $7,845 | | Nine months ended June 30 | $23,791 | $22,998 | [9. Other Assets](index=19&type=section&id=Note%209.%20Other%20Assets) Total other assets significantly increased to $4.2 million, primarily due to higher implementation costs for software hosting arrangements **Total Other Assets (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $4,218 | | September 30, 2024 | $458 | **Amortizable Other Assets, Net (Implementation costs for software hosting arrangements, Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $3,950 | | September 30, 2024 | $171 | [10. Goodwill and Other Intangible Assets](index=19&type=section&id=Note%2010.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill and other intangible assets, net, decreased to $12.2 million due to amortization, while goodwill remained constant **Total Goodwill and Other Intangibles, Net (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $12,195 | | September 30, 2024 | $13,488 | **Amortizable Intangible Assets, Net (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $6,592 | | September 30, 2024 | $7,832 | - Goodwill remained constant at **$5,198 thousand** for both periods[73](index=73&type=chunk) [11. Accrued Expenses](index=20&type=section&id=Note%2011.%20Accrued%20Expenses) Total accrued expenses decreased to $31.5 million, mainly due to reductions in payroll and tax-related liabilities **Total Accrued Expenses (Dollars in thousands):** | Date | Amount | | :-------------------- | :------- | | June 30, 2025 | $31,481 | | September 30, 2024 | $35,847 | **Key Components of Accrued Expenses (Dollars in thousands):** | Component | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :-------------- | :----------------- | | Payroll and employee-related expenses | $18,688 | $21,874 | | Accrued property, sales, and use tax payable | $8,029 | $9,607 | [12. Income Taxes](index=20&type=section&id=Note%2012.%20Income%20Taxes) Income taxes are accounted for under ASC 740, with the OBBBA not expected to materially impact financial statements for the period - Income taxes are accounted for in accordance with FASB ASC Topic 740[75](index=75&type=chunk) - The U.S. federal government enacted the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, which is being evaluated but not expected to have a material impact on consolidated financial statements for the periods ended June 30, 2025[76](index=76&type=chunk) [13. Related Party Transactions](index=20&type=section&id=Note%2013.%20Related%20Party%20Transactions) The Company has ongoing operating lease agreements with related parties, with rent payments totaling $0.6 million for the three and nine months ended June 30 - Has five operating leases with Chalet Properties, LLC, owned by the Company's non-independent Board members and other related family members[77](index=77&type=chunk) - Has one operating lease with Isely Family Land Trust LLC[78](index=78&type=chunk) - Has one operating lease with FTVC, LLC, owned by the Company's non-independent Board members and other related family members[79](index=79&type=chunk) **Rent Paid to Related Parties (Dollars in millions):** | Related Party | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Chalet Properties, LLC | $0.2 | $0.2 | $0.6 | $0.6 | | Isely Family Land Trust LLC | $0.1 | $0.1 | $0.2 | $0.2 | | FTVC, LLC | < $0.1 | < $0.1 | < $0.1 | < $0.1 | [14. Commitments and Contingencies](index=20&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) The Company is self-insured for certain losses and involved in legal proceedings, but management anticipates no material adverse effects - The Company is self-insured for certain losses, liabilities, and employee benefit costs[80](index=80&type=chunk) - Periodically involved in various legal proceedings, including labor and employment-related claims and customer injury claims[81](index=81&type=chunk) - Management does not believe any currently pending legal proceeding will have a material adverse effect on its financial statements[81](index=81&type=chunk) [15. Subsequent Event](index=22&type=section&id=Note%2015.%20Subsequent%20Event) On August 6, 2025, the Board approved a quarterly cash dividend of $0.12 per share, payable on September 17, 2025 - On August 6, 2025, the Board approved the payment of a quarterly cash dividend of **$0.12 per share** of common stock, to be paid on September 17, 2025[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, including business overview, performance, industry trends, outlook, and key metrics [Company Overview](index=23&type=section&id=Company%20Overview) The Company operates 169 stores in 21 states, focusing on natural and organic products, with plans for new store openings and remodels - Operates **169 stores** in **21 states** as of June 30, 2025, specializing in natural and organic groceries, dietary supplements, and body care products[85](index=85&type=chunk) - Increased store count at a compound annual growth rate of **2.0%** over the five fiscal years ended September 30, 2024[87](index=87&type=chunk) - Plans to open **two new stores** and relocate/remodel **three existing stores** in fiscal year 2025[87](index=87&type=chunk) - During the nine months ended June 30, 2025, opened **two new stores**, relocated/remodelled **two existing stores**, and closed **two stores**[87](index=87&type=chunk) [Performance Highlights](index=23&type=section&id=Performance%20Highlights) Key performance highlights include net sales growth of 6.3% and 8.2% for the three and nine months ended June 30, 2025, respectively **Key Performance Highlights (YoY Growth):** | Metric | Three months ended June 30, 2025 | Nine months ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :------------------------------ | | Net sales growth | 6.3% | 8.2% | | Daily average comparable store sales growth | 7.4% | 8.4% | | Net income growth | 26.0% | 39.0% | | EBITDA growth | 13.8% | 21.4% | | Adjusted EBITDA growth | 10.1% | 21.2% | - Net sales for the three months ended June 30, 2025, were adversely impacted by approximately **$3.5 million to $4.0 million** due to a UNFI cybersecurity incident[108](index=108&type=chunk)[96](index=96&type=chunk) - Diluted earnings per share for the three months ended June 30, 2025, was adversely impacted by **$0.04 to $0.05** due to the UNFI cybersecurity incident[96](index=96&type=chunk) [Industry Trends and Economics](index=24&type=section&id=Industry%20Trends%20and%20Economics) Sales are influenced by economic conditions, labor challenges, supply chain issues, and intense competition in the natural and organic industry - The grocery industry and Company sales are affected by general economic conditions, including consumer spending, disposable income, interest rates, inflation/deflation, and the political environment[89](index=89&type=chunk) - Experienced labor market challenges and increased wages for store Crew members due to labor shortages in the retail industry[89](index=89&type=chunk) - Global supply chain issues have led to product shortages and delivery delays, with mitigation efforts underway[89](index=89&type=chunk) - The natural and organic grocery and dietary supplements industry continues to grow, driven by increased public interest in health and nutrition[91](index=91&type=chunk) - Faces intense competition in a large, fragmented, and highly competitive industry, including from industry consolidation and expansion by existing competitors[91](index=91&type=chunk) [Outlook](index=25&type=section&id=Outlook) The Company anticipates continued growth driven by its loyal customer base, increasing transaction size, and differentiated shopping experience - Believes key factors like a loyal customer base, increasing transaction size, growing consumer interest in nutrition, and a differentiated shopping experience will drive comparable store sales and profitable expansion[93](index=93&type=chunk) - New store unit growth rate in the foreseeable future will depend on economic and business conditions, construction permitting, and availability of materials, equipment, and labor[94](index=94&type=chunk) - Identifies opportunities for increased leverage of costs and economies of scale in sourcing products[94](index=94&type=chunk) [Key Financial Metrics in Our Business](index=25&type=section&id=Key%20Financial%20Metrics%20in%20Our%20Business) This section defines key financial metrics such as net sales, daily average comparable store sales, cost of goods sold, and gross profit - Net sales are comprised of gross sales net of discounts, in-house coupons, returns, and allowances[96](index=96&type=chunk) - Daily average comparable store sales include sales from stores in the comparable store base for a reporting period against sales from the same stores for the same number of operating months in the prior fiscal year, including remodeled or relocated stores[97](index=97&type=chunk) - A cybersecurity incident at primary distributor UNFI in June 2025 adversely impacted daily average comparable store sales by **1.0 to 1.5 percentage points** and diluted EPS by **$0.04 to $0.05** for the three months ended June 30, 2025[96](index=96&type=chunk) - Cost of goods sold and occupancy costs include inventory cost, shipping and handling, distribution, buying, shrink expense, third-party delivery fees, and store occupancy costs[99](index=99&type=chunk) - Gross profit is net sales less cost of goods sold and occupancy costs; gross margin is gross profit as a percentage of net sales[100](index=100&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) **Statements of Income Data as a Percentage of Net Sales:** | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | 100.0% | 100.0% | 100.0% | 100.0% | | Cost of goods sold and occupancy costs | 70.1% | 70.8% | 70.0% | 70.7% | | Gross profit | 29.9% | 29.2% | 30.0% | 29.3% | | Store expenses | 21.8% | 21.9% | 21.9% | 22.3% | | Administrative expenses | 3.3% | 3.1% | 3.4% | 3.1% | | Pre-opening expenses | 0.0% | 0.1% | 0.1% | 0.1% | | Operating income | 4.7% | 4.2% | 4.7% | 3.8% | | Interest expense, net | (0.2)% | (0.3)% | (0.2)% | (0.3)% | | Income before income taxes | 4.5% | 3.8% | 4.4% | 3.5% | | Provision for income taxes | (1.0)% | (0.8)% | (1.0)% | (0.7)% | | Net income | 3.5% | 3.0% | 3.5% | 2.7% | **Other Operating Data:** | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Number of stores at end of period | 169 | 168 | | Twelve-month store unit growth rate | 0.6% | 2.4% | | Change in daily average comparable store sales | 7.4% | 7.2% | [Three months ended June 30, 2025 vs. 2024](index=28&type=section&id=Three%20months%20ended%20June%2030%2C%202025%20compared%20to%20the%20three%20months%20ended%20June%2030%2C%202024) Net sales rose **6.3%** to **$328.7 million**, driven by **7.4%** comparable store sales growth, leading to **26.0%** net income increase **Key Financial Results (Three months ended June 30, Dollars in thousands, except per share data):** | Metric | 2025 | 2024 | Change (Dollars) | Change (%) | | :-------------------------- | :------- | :------- | :--------------- | :--------- | | Net sales | $328,705 | $309,082 | $19,623 | 6.3% | | Gross profit | $98,279 | $90,331 | $7,948 | 8.8% | | Operating income | $15,587 | $12,847 | $2,740 | 21.3% | | Net income | $11,605 | $9,209 | $2,396 | 26.0% | | Diluted EPS | $0.50 | $0.40 | $0.10 | 25.0% | - Daily average comparable store sales increased **7.4%**, driven by a **4.8%** increase in daily average transaction count and a **2.4%** increase in daily average transaction size[108](index=108&type=chunk) - Gross margin increased to **29.9%** (2025) from **29.2%** (2024), primarily attributed to higher product margin from effective promotions[109](index=109&type=chunk) - Administrative expenses increased **14.7%** to **$10.9 million**, driven by higher technology expenses and compensation expenses[111](index=111&type=chunk) [Nine months ended June 30, 2025 vs. 2024](index=29&type=section&id=Nine%20months%20ended%20June%2030%2C%202025%20compared%20to%20the%20nine%20months%20ended%20June%2030%2C%202024) Net sales increased **8.2%** to **$994.7 million**, with **8.4%** comparable store sales growth, driving **39.0%** net income surge **Key Financial Results (Nine months ended June 30, Dollars in thousands, except per share data):** | Metric | 2025 | 2024 | Change (Dollars) | Change (%) | | :-------------------------- | :------- | :------- | :--------------- | :--------- | | Net sales | $994,695 | $918,924 | $75,771 | 8.2% | | Gross profit | $298,851 | $269,448 | $29,403 | 10.9% | | Operating income | $46,488 | $34,911 | $11,577 | 33.2% | | Net income | $34,644 | $24,925 | $9,719 | 39.0% | | Diluted EPS | $1.49 | $1.08 | $0.41 | 37.9% | - Daily average comparable store sales increased **8.4%**, resulting from a **5.4%** increase in daily average transaction count and a **2.9%** increase in daily average transaction size[117](index=117&type=chunk) - Gross margin increased to **30.0%** (2025) from **29.3%** (2024), driven by higher product margin from effective promotions and store occupancy cost leverage[118](index=118&type=chunk) - Administrative expenses increased **17.6%** to **$33.5 million**, driven by higher compensation expenses (including costs related to the Chief Financial Officer transition) and technology expenses[120](index=120&type=chunk) [Non-GAAP Financial Measures (EBITDA and Adjusted EBITDA)](index=30&type=section&id=Non-GAAP%20financial%20measures) This section defines and presents EBITDA and Adjusted EBITDA, key non-GAAP financial measures used to assess the Company's operating performance **EBITDA and Adjusted EBITDA (Dollars in thousands):** | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | EBITDA | $23,540 | $20,692 | $70,279 | $57,909 | | Adjusted EBITDA | $24,385 | $22,156 | $73,500 | $60,635 | **EBITDA and Adjusted EBITDA as a Percentage of Net Sales:** | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | EBITDA % of Net Sales | 7.2% | 6.7% | 7.1% | 6.3% | | Adjusted EBITDA % of Net Sales | 7.4% | 7.2% | 7.4% | 6.6% | - EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, and amortization[125](index=125&type=chunk) - Adjusted EBITDA further excludes impairment charges, store closing costs, share-based compensation, and amortization of software hosting arrangement (SaaS) implementation costs[125](index=125&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity position includes $13.2 million in cash and $69.5 million available under its credit facility, with changes in cash flows detailed **Liquidity Position (Dollars in millions):** | Metric | June 30, 2025 | | :-------------------------- | :-------------- | | Cash and cash equivalents | $13.2 | | Available for borrowing under Credit Facility | $69.5 | **Cash Flow Summary (Nine months ended June 30, Dollars in thousands):** | Activity | 2025 | 2024 | | :------------------------------------------ | :------- | :------- | | Net cash provided by operating activities | $39,677 | $49,280 | | Net cash used in investing activities | $(22,942) | $(31,808) | | Net cash used in financing activities | $(12,428) | $(21,899) | - Net cash provided by operating activities decreased by **$9.6 million (19.5%)** for the nine months ended June 30, 2025, compared to the prior year[139](index=139&type=chunk) - Net cash used in investing activities decreased by **$8.9 million (27.9%)** for the nine months ended June 30, 2025, primarily due to decreases in acquisitions of property and equipment and other intangibles[140](index=140&type=chunk) - Plans to spend approximately **$7.1 million to $10.1 million** on capital expenditures during the remainder of fiscal year 2025, primarily for new store openings and relocations/remodels[141](index=141&type=chunk) [Critical Accounting Policies](index=34&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies, including income taxes, asset impairment, and leases, involve significant judgments and estimates - Critical accounting policies include accounting for income taxes, impairment of long-lived assets, and leases, which involve significant judgments and estimates[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes have occurred in the Company's market risk position since the information provided in its annual Form 10-K - No material changes regarding the Company's market risk position from the information provided in its Annual Report on Form 10-K[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[155](index=155&type=chunk) - No material changes in internal control over financial reporting during the most recent fiscal quarter[156](index=156&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal proceedings, but management does not anticipate any material adverse effects on its financial condition - Periodically involved in various legal proceedings, including labor and employment-related claims, customer personal injury claims, and investigations[159](index=159&type=chunk) - Management does not believe any currently pending legal proceeding will have a material adverse effect on its business, prospects, financial condition, cash flows, or results of operations[159](index=159&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors highlight potential adverse impacts of new or increased tariffs on foreign-sourced goods, affecting costs and competitive position - New or increased tariffs on foreign-sourced goods or materials could have a material adverse effect on the Company's business, financial condition, and results of operations[161](index=161&type=chunk) - Tariffs may cause higher costs to procure products, potentially requiring price increases and adversely affecting competitive position[161](index=161&type=chunk) - A prolonged trade conflict could result in adverse and uncertain economic conditions and negatively impact demand for products[161](index=161&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including corporate governance documents, executive certifications, and Inline XBRL financial statements - Includes certifications of principal executive officers and principal financial officer required under the Sarbanes-Oxley Act of 2002[163](index=163&type=chunk) - Consolidated financial statements are formatted in Inline XBRL (eXtensible Business Reporting Language)[163](index=163&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) The report is signed by Kemper Isely, Co-President, and Richard Hallé, CFO, on behalf of Natural Grocers by Vitamin Cottage, Inc - Signed by Kemper Isely, Co-President (Principal Executive Officer)[167](index=167&type=chunk) - Signed by Richard Hallé, Chief Financial Officer (Principal Financial and Accounting Officer)[167](index=167&type=chunk) - Report signed on August 7, 2025[165](index=165&type=chunk)

Company Overview - Natural Grocers, founded in 1955, is a specialty retailer of natural and organic groceries, body care products, and dietary supplements, with a commitment to high-quality standards [8] - The company operates 169 stores across 21 states, including its expansion into Missouri, where it has established seven stores since 2011 [11] Expansion in Missouri - Natural Grocers opened its first store in Missouri in Columbia in 2011 and has since added six more locations, with the latest store opening in Springfield in 2021 [1] - The company emphasizes its family-operated nature and community roots, aligning its values with the culture and community spirit of Missouri [2] Customer Engagement and Promotions - To celebrate Missouri Statehood Day, Natural Grocers will offer promotions for {N}power members, including a free reusable shopping bag and a $5-off coupon from August 10 to August 12, 2025 [3][9] - The {N}power program is a free customer rewards initiative that provides exclusive discounts and rewards points for members [4] Employee Commitment - Natural Grocers employs approximately 125 crew members in Missouri and is dedicated to their physical, emotional, and financial well-being through various support programs and benefits [5] - In fiscal year 2024, the company invested over $15 million in compensation and discretionary payments for its crew [8] Product Standards - The company adheres to strict quality guidelines, ensuring that its grocery products do not contain artificial ingredients and are USDA-certified organic [8]

Core Points - Natural Grocers is celebrating the 10-year anniversary of its Scottsdale Rd. store with exclusive offers for {N}power members from August 8 to 10, 2025 [1][2] - The company has been serving Arizona communities since its expansion in 2012, with the Scottsdale Rd. store opening in August 2015 [3] - The anniversary celebration includes special deals and in-store festivities as a thank you to the community for their support over the past decade [4] Exclusive Offers - On August 8, {N}power members will receive a surprise offer via email or mobile app, valid from August 8 to 10 [5] - From August 8 to 10, customers can access $10 deals and can sign up for {N}power for free through various methods [6] - Specific offers include 2 for $10 on selected Natural Grocers Brand products and 6 for $10 on organic beverages [8][10] Company Overview - Natural Grocers, founded in 1955, is a specialty retailer of natural and organic groceries, body care products, and dietary supplements, with strict quality guidelines [7] - The company operates 169 stores across 21 states and is committed to its Five Founding Principles, including community and crew commitments [7] - In fiscal year 2024, Natural Grocers invested over $15 million in compensation and discretionary payments for its crew [7]

Core Insights - Natural Grocers is celebrating its 70th anniversary, emphasizing its commitment to quality products and community values established by its founders in 1955 [1][2][3] - The company operates 169 stores across 21 states, maintaining a focus on organic and natural products that meet strict quality standards [3][10] Anniversary Celebration Details - The anniversary event will take place from August 14 to 16, featuring discounts of up to 60% on over 500 products [7] - Customers can participate in various giveaways, including a chance to win a Mustang Mach-E® Premium or $47,000 cash, along with other prizes totaling over $194,000 [5][16] - Special promotions include free snow cones, popcorn, and limited-edition products like the Pecan Caramel Pie coffee blend priced at $7.99 for 10 ounces [6][7] Community Engagement - On August 14, 1% of all sales will be donated to the Heroes in Aprons Fund, supporting Natural Grocers employees facing unexpected hardships [8][12] - The company continues to uphold its Five Founding Principles, including a commitment to community and crew, with significant investments in employee compensation [10]

Core Viewpoint - Natural Grocers by Vitamin Cottage, Inc. will release its third quarter fiscal year 2025 financial results on August 7, 2025, followed by a conference call for analysts and investors [1] Company Overview - Natural Grocers by Vitamin Cottage, Inc. is a specialty retailer focused on natural and organic groceries, body care products, and dietary supplements [3] - The company adheres to strict quality guidelines, ensuring products do not contain artificial flavors, preservatives, or sweeteners, and only sells USDA certified organic produce and pasture-raised dairy products [3] - Founded in 1955, Natural Grocers operates 169 stores across 21 states, utilizing a smaller-store format to provide affordable prices in a clean and convenient shopping environment [3] Conference Call Details - The conference call will take place at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) on August 7, 2025, with participation options provided for U.S., Canada, and international callers [1] - Investors can listen to the conference call via the company's Investor Relations website, and an audio recording will be available for at least 20 days post-call [2]

Core Insights - Natural Grocers has established a strong presence in Utah with eight locations since opening its first store in St. George in 2009, reflecting the company's commitment to the local community and healthy living [1][2] Group 1: Community Engagement - The company emphasizes its alignment with Utah's values of community and healthy living, as expressed by its vice president of marketing, Raquel Isely [2] - Natural Grocers plans to celebrate National Pioneer Day by offering freebies and extra savings for its {N}power members from July 24 to July 26, 2025 [3][8] Group 2: Customer Rewards Program - The {N}power program is a free customer rewards initiative that provides exclusive discounts and rewards points for members, enhancing customer loyalty [4] - Non-members can easily sign up for the {N}power program to access benefits and discounts [4] Group 3: Employee Commitment - Natural Grocers employs nearly 200 crew members in Utah and is dedicated to their well-being through nutrition education programs and excellent benefits [5] - In fiscal year 2024, the company invested over $15 million in additional compensation and discretionary payments for its crew [6] Group 4: Company Overview - Founded in 1955, Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) specializes in natural and organic groceries, body care products, and dietary supplements, adhering to strict quality guidelines [6] - The company operates 169 stores across 21 states, focusing on affordable prices and a clean shopping environment [6]

Core Insights - Natural Grocers has launched a new line of Organic Wellness Shots, which combine fruit juices and botanical ingredients, with some varieties containing probiotics, offering a convenient wellness option with organic certification [1][2] - The shots are available in six flavors and are sold individually for $2.99 at Natural Grocers stores, emphasizing sustainability through recyclable glass packaging [2] - Since its inception in 2016, Natural Grocers has expanded its private-label product line to over 900 items, including recent additions like Organic Cheese and a vegan Skincare Collection [3] Company Overview - Natural Grocers by Vitamin Cottage, Inc. is a specialty retailer founded in 1955, focusing on natural and organic groceries, body care products, and dietary supplements, with strict quality guidelines for its products [4] - The company operates 169 stores across 21 states and is committed to community and employee welfare, investing over $15 million in employee compensation in fiscal year 2024 [4] - Natural Grocers offers USDA-certified organic produce and pasture-raised dairy products, maintaining a shopper-friendly environment with affordable pricing [4]

Core Insights - Natural Grocers is actively supporting flood relief efforts in Central Texas through a campaign that emphasizes community commitment and compassion during disasters [2][3]. Company Overview - Natural Grocers by Vitamin Cottage, Inc. was founded in 1955 and operates as a specialty retailer of natural and organic groceries, body care products, and dietary supplements [3]. - The company adheres to strict quality guidelines, ensuring that its products do not contain artificial flavors, preservatives, or sweeteners, and exclusively offers USDA-certified organic produce and pasture-raised dairy products [3]. - As of fiscal year 2024, Natural Grocers has invested over $15 million in additional compensation and discretionary payments for its employees, reflecting its commitment to its workforce [3]. Community Commitment - The company’s principle of "Commitment to Community" is highlighted in response to the catastrophic flooding, showcasing its dedication to supporting local neighborhoods affected by the disaster [2][3]. - Raquel Isely, the vice president of marketing, emphasized the importance of community support during difficult times and expressed gratitude for the local team's quick response to the need for relief efforts [3]. Store Locations - Natural Grocers operates 169 stores across 21 states, providing a shopper-friendly environment with affordable prices [3].

Core Insights - Natural Grocers is hosting a promotional event from July 10-12, offering discounts of up to 36% on select items across all 169 locations nationwide [1][3] - The company is also running a Splash Buddy Scavenger Hunt on July 12, where customers can win gift cards by finding plush animals in stores [2][4] - Additional savings of up to 39% are available through July 26 on various products, including frozen items and snacks [3][9] Promotions and Offers - The {N}power loyalty program provides members with exclusive rewards, sweepstakes, and meal deals throughout July [3][10] - Customers can participate in a BINGO game to earn rewards of up to $15 by completing purchase requirements [4][10] - A "Spend & Win" promotion allows {N}power members who spend $100 or more to enter a sweepstakes for a chance to win a cooler bag and a trip to Lake Tahoe valued at $2,500 [4][12] Product Highlights - Featured products include Love Corn® Corn Snacks, Vita Coco® Coconut Water, and Natural Grocers® Brand snacks, with prices ranging from $2.39 to $4.89 [4][5] - The company emphasizes its commitment to quality, selling only USDA-certified organic produce and non-GMO products [6][9] - Natural Grocers provides a variety of meal deals that are affordable and designed to feed families, with options priced under $18 [4][6] Company Overview - Founded in 1955, Natural Grocers by Vitamin Cottage, Inc. operates 169 stores across 21 states, focusing on natural and organic groceries, body care products, and dietary supplements [6][11] - The company adheres to strict quality guidelines, ensuring products are free from artificial ingredients and meet high nutritional standards [6][9] - Natural Grocers is committed to community engagement and employee welfare, investing over $15 million in compensation and discretionary payments for its staff in fiscal year 2024 [6][11]