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

PART I. Financial Information Financial Statements The unaudited interim consolidated financial statements for the period ended March 31, 2024, reflect decreased total assets, stable liabilities, and significant increases in net sales and net income, with cash flow impacted by a special dividend Consolidated Balance Sheets As of March 31, 2024, total assets decreased to $656.6 million, primarily due to reduced cash, while total liabilities remained stable and equity declined due to dividends | Balance Sheet Items | March 31, 2024 (in thousands) | September 30, 2023 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,970 | $18,342 | | Total current assets | $140,869 | $152,550 | | Total assets | $656,571 | $669,185 | | Liabilities & Equity | | | | Total current liabilities | $159,895 | $154,029 | | Total liabilities | $496,597 | $498,344 | | Total stockholders' equity | $159,974 | $170,841 | Consolidated Statements of Income For the three and six months ended March 31, 2024, net sales and net income significantly increased, with diluted EPS also rising compared to prior-year periods | Income Statement Highlights | Three Months Ended Mar 31, 2024 (in thousands) | Three Months Ended Mar 31, 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $308,092 | $283,245 | 8.8% | | Gross profit | $90,357 | $82,477 | 9.6% | | Operating income | $11,261 | $8,431 | 33.6% | | Net income | $7,961 | $5,884 | 35.3% | | Diluted EPS | $0.35 | $0.26 | 34.6% | | Income Statement Highlights | Six Months Ended Mar 31, 2024 (in thousands) | Six Months Ended Mar 31, 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $609,842 | $563,702 | 8.2% | | Gross profit | $179,117 | $161,196 | 11.1% | | Operating income | $22,064 | $14,848 | 48.6% | | Net income | $15,716 | $10,291 | 52.7% | | Diluted EPS | $0.68 | $0.45 | 51.1% | Consolidated Statements of Cash Flows For the six months ended March 31, 2024, operating cash flow slightly increased, while investing and financing cash outflows grew significantly, leading to a net decrease in cash | Cash Flow Activities (Six Months Ended) | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | | :--- | :--- | :--- | | 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, end of period | $10,970 | $18,965 | - A significant use of cash in financing activities was $27.3 million paid in dividends to shareholders during the six months ended March 31, 2024, compared to $4.5 million in the prior year period[23] Notes to Unaudited Interim Consolidated Financial Statements The notes detail accounting policies, store operations, revenue breakdown, credit facility, and significant dividend payments, including a special dividend and subsequent board approvals - The company operated 168 stores in 21 states as of March 31, 2024, an increase from 165 stores as of September 30, 2023[27] | Revenue by Product Category (Six Months Ended Mar 31) | 2024 | 2023 | | :--- | :--- | :--- | | Grocery | 70% | 70% | | Dietary supplements | 20% | 21% | | Body care, pet care and other | 10% | 9% | - The company paid a special cash dividend of $1.00 per share in the first quarter of fiscal year 2024, in addition to its regular quarterly dividend of $0.10 per share[55] - On May 8, 2024, the Board approved a quarterly cash dividend of $0.10 per share and extended the company's share repurchase program to May 31, 2026[78] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q2 and H1 FY2024 performance to increased sales and comparable store sales, improved gross margin, solid liquidity, and plans for new store openings and remodels | Performance Metric | Q2 FY2024 | Q2 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $308.1M | $283.2M | +8.8% | | Daily Avg. Comparable Store Sales | +7.5% | +2.7% | +4.8 p.p. | | Net Income | $8.0M | $5.9M | +35.3% | | Adjusted EBITDA | $19.7M | $16.8M | +17.4% | | Performance Metric | H1 FY2024 | H1 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $609.8M | $563.7M | +8.2% | | Daily Avg. Comparable Store Sales | +6.9% | +1.6% | +5.3 p.p. | | Net Income | $15.7M | $10.3M | +52.7% | | Adjusted EBITDA | $38.5M | $30.6M | +25.6% | - The company plans to open four to six new stores and relocate/remodel four to six existing stores in fiscal year 2024. As of March 31, 2024, three new stores had been opened and one relocated/remodelled[83] - Management estimates the company experienced annualized cost inflation of approximately 2% in the second quarter of fiscal year 2024, influenced by supply disruptions, and increased shipping, commodity, and labor costs[87] Quantitative and Qualitative Disclosures About Market Risk No material changes have occurred regarding the company's market risk position since the prior fiscal year's Form 10-K disclosure - There have been no material changes regarding the company's market risk position from the information provided in the Form 10-K[148] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2024, the company's principal executive and financial officers concluded that disclosure controls and procedures were effective[150] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[151] PART II. Other Information Legal Proceedings The company is involved in various legal proceedings, none of which are expected to have a material adverse effect on its financial statements - The company states that it does not believe any currently pending legal proceedings will have a material adverse effect on its business, financial condition, or results of operations[153] Risk Factors No material changes have occurred regarding the risk factors disclosed in the company's Form 10-K - No material changes have occurred regarding the risk factors disclosed in the company's Form 10-K[154] Other Information The Board of Directors extended the share repurchase program until May 31, 2026, with approximately $8.1 million remaining for repurchases - The company's Board of Directors extended the share repurchase program until May 31, 2026, with approximately $8.1 million remaining for repurchases[155] Exhibits This section provides an index of exhibits filed with the Form 10-Q, including corporate governance documents and certifications - Lists exhibits filed with the report, including Sarbanes-Oxley Act certifications and iXBRL data files[159]