Natural Grocers by Vitamin tage(NGVC) - 2024 Q2 - Quarterly Results

Natural Grocers by Vitamin Cottage Announces Second Quarter Fiscal 2024 Results Financial and Operational Highlights The company reported record Q2 sales, expanded margins, and significant earnings growth, leading to an upgraded fiscal 2024 outlook Q2 Fiscal 2024 Key Performance Indicators | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $308.1 million | +8.8% | | Daily Average Comparable Store Sales | +7.5% | - | | Net Income | $8.0 million | +36.0% | | Diluted Earnings Per Share (EPS) | $0.35 | +34.6% | | Adjusted EBITDA | $19.7 million | +17.4% | - The 7.5% growth in daily average comparable store sales was driven by a 3.9% increase in transaction size and a 3.5% increase in transaction count, indicating both higher spending per visit and more customer traffic[3] - Based on the strong performance in the first half of the year, the company raised its fiscal 2024 outlook for daily average comparable store sales growth and diluted earnings per share[3] Operating Results Robust sales growth, driven by comparable store performance and expanded gross margins, boosted operating income across both Q2 and H1 2024 Second Quarter Fiscal 2024 vs. 2023 Q2 net sales grew 8.8% to $308.1 million, with improved gross margins and expense control driving a 34.6% rise in diluted EPS Q2 Fiscal 2024 vs. Q2 Fiscal 2023 (in millions, except EPS) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $308.1 | $283.2 | +8.8% | | Gross Profit | $90.4 | $82.5 | +9.6% | | Operating Income | $11.3 | $8.4 | +34.4% | | Net Income | $8.0 | $5.9 | +36.0% | | Diluted EPS | $0.35 | $0.26 | +34.6% | - The increase in net sales was driven by a $21.1 million rise in comparable store sales and $5.2 million from new stores[4] - Gross margin increased to 29.3% from 29.1%, driven by store occupancy cost leverage, though partially offset by lower product margin from product mix[5] - Store expenses as a percentage of net sales decreased to 22.5% from 23.0% in the prior year quarter, demonstrating effective expense leverage[6] First Six Months Fiscal 2024 vs. 2023 H1 net sales rose 8.2% to $609.8 million, with significant gross margin expansion leading to a 52.5% increase in net income First Six Months Fiscal 2024 vs. 2023 (in millions, except EPS) | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $609.8 | $563.7 | +8.2% | | Gross Profit | $179.1 | $161.2 | +11.1% | | Operating Income | $22.1 | $14.8 | +49.2% | | Net Income | $15.7 | $10.3 | +52.5% | | Diluted EPS | $0.68 | $0.45 | +51.1% | - Daily average comparable store sales for the six-month period grew 6.9%, comprised of a 3.4% increase in transaction count and a 3.3% increase in transaction size[11] - Gross margin for the first six months increased to 29.4% from 28.6% year-over-year, attributed to effective pricing and promotions and store occupancy cost leverage[12] Financial Position and Cash Flow The company maintained a solid financial position, generating $36.8 million in operating cash flow to fund capital expenditures Balance Sheet and Cash Flow Highlights (as of March 31, 2024) | Metric | Value (in millions) | | :--- | :--- | | Cash and cash equivalents | $11.0 | | Outstanding borrowings (revolving facility) | $11.4 | | Cash from operations (First six months) | $36.8 | | Net capital expenditures (First six months) | $22.5 | - Net cash provided by operating activities for the first six months of fiscal 2024 was $36.8 million, compared to $34.9 million in the prior year period[33] Growth, Dividends, and Outlook The company continues its store expansion, announced a quarterly dividend, and raised its fiscal 2024 sales and earnings outlook Store Growth and Development The company expanded its footprint to 168 stores across 21 states with the opening of one new store in Q2 2024 - The company ended Q2 fiscal 2024 with 168 stores in 21 states after opening one new store during the quarter[19] Dividend Announcement The Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable in June 2024 - A quarterly cash dividend of $0.10 per common share was declared, payable on June 19, 2024, to stockholders of record on June 3, 2024[18] Fiscal 2024 Outlook Fiscal 2024 guidance was raised, projecting comparable store sales growth of 4.0%-6.0% and diluted EPS of $1.08-$1.18 Updated Fiscal 2024 Outlook | Metric | Fiscal 2024 Outlook | | :--- | :--- | | Number of new stores | 4 to 6 | | Number of relocations/remodels | 4 to 6 | | Daily average comparable store sales growth | 4.0% to 6.0% (Raised) | | Diluted earnings per share | $1.08 to $1.18 (Raised) | | Capital expenditures (in millions) | $30 to $39 | Consolidated Financial Statements This section presents the unaudited consolidated statements of income, balance sheets, and cash flows for the period ended March 31, 2024 Consolidated Statements of Income Consolidated Statements of Income (Unaudited, in thousands) | | Three months ended March 31, | Six months ended March 31, | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Net sales | $308,092 | $283,245 | $609,842 | $563,702 | | Gross profit | $90,357 | $82,477 | $179,117 | $161,196 | | Operating income | $11,261 | $8,431 | $22,064 | $14,848 | | Net income | $7,961 | $5,884 | $15,716 | $10,291 | | Diluted EPS | $0.35 | $0.26 | $0.68 | $0.45 | Consolidated Balance Sheets Consolidated Balance Sheets (Unaudited, in thousands) | | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,970 | $18,342 | | Merchandise inventory | $117,352 | $119,260 | | Total current assets | $140,869 | $152,550 | | Total assets | $656,571 | $669,185 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $159,895 | $154,029 | | Total liabilities | $496,597 | $498,344 | | Total stockholders' equity | $159,974 | $170,841 | | Total liabilities and stockholders' equity | $656,571 | $669,185 | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Unaudited, in thousands) | | Six months ended March 31, | | :--- | :--- | | | 2024 | 2023 | | Net cash provided by operating activities | $36,847 | $34,857 | | Net cash used in investing activities | ($22,510) | ($17,765) | | Net cash used in financing activities | ($21,709) | ($10,166) | | Net (decrease) increase in cash | ($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 | Non-GAAP Financial Measures Adjusted EBITDA, a key non-GAAP metric, increased 17.4% in Q2 and 25.6% in H1, with corresponding margin expansion - Management uses EBITDA and Adjusted EBITDA to compare operating performance on a consistent basis, excluding certain non-cash and non-recurring items[35][38] - Adjusted EBITDA as a percentage of net sales increased to 6.4% in Q2 2024 from 5.9% in Q2 2023, and to 6.3% for H1 2024 from 5.4% in the prior year period[37] Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $7,961 | $5,884 | $15,716 | $10,291 | | EBITDA | $18,963 | $15,585 | $37,217 | $29,064 | | Adjusted EBITDA | $19,730 | $16,812 | $38,479 | $30,648 |