LAKEWOOD, Colo., Aug. 4, 2022
/PRNewswire/ -- Natural Grocers by Vitamin Cottage, Inc.
(NYSE: NGVC) today announced results for its third quarter of
fiscal 2022 ended June 30, 2022 and
refined its outlook for fiscal 2022.
Highlights for Third Quarter
Fiscal 2022 Compared to Third Quarter Fiscal 2021
- Net sales increased 3.0% to $266.3
million;
- Daily average comparable store sales increased 2.5%;
- Operating income was $5.7
million;
- Net income was $3.9 million with
diluted earnings per share of $0.17;
and
- Adjusted EBITDA was $13.0
million.
"We are pleased with our results in the third quarter, which
were in-line with our expectations," said Kemper Isely, Co-President. "Consumers continue
to be drawn to the quality and value of our offering, along with
our convenient shopping experience, making us a leading destination
for natural and organic products in our markets. Since the
third quarter of fiscal 2019 our daily average comparable store
sales have increased 14.1% and diluted earnings per share have
grown 88.9%, underscoring the strength of our differentiated model
as well as our emphasis on operational excellence. We remain
confident in our fiscal 2022 outlook and continue to focus on
driving profitable growth and enhancing shareholder value."
In addition to presenting the financial results of Natural
Grocers by Vitamin Cottage, Inc. and its subsidiaries
(collectively, the Company) in conformity with U.S. generally
accepted accounting principles (GAAP), the Company is also
presenting EBITDA and Adjusted EBITDA, which are non-GAAP financial
measures. The reconciliation from GAAP to these non-GAAP financial
measures is provided at the end of this earnings release.
Operating Results — Third Quarter
Fiscal 2022 Compared to Third Quarter Fiscal 2021
During the third quarter of fiscal 2022, net sales increased
$7.7 million, or 3.0%, to
$266.3 million, compared to the third
quarter of fiscal 2021, due to a $6.4
million increase in comparable store sales and a
$2.1 million increase in new store
sales, partially offset by a $0.8
million decrease in sales from one store that closed at the
beginning of the quarter. Daily average comparable store sales
increased 2.5% in the third quarter of fiscal 2022, and was
comprised of a 2.7% increase in daily average transaction size,
partially offset by a 0.2% decrease in daily average transaction
count. The increase in net sales was primarily driven by retail
price inflation, our customers' response to pandemic trends,
marketing initiatives, promotional campaigns and increased
engagement in our {N}power® customer loyalty program.
Gross profit during the third quarter of fiscal 2022 increased
2.8% to $73.6 million, driven by
increased sales volume. Gross profit reflects earnings after
product and occupancy expenses. Gross margin decreased 10 basis
points to 27.6% during the third quarter of fiscal 2022, compared
to the third quarter of fiscal 2021. The decrease in gross margin
was primarily driven by lower product margin attributed to higher
freight, distribution and shrink expenses, partially offset by
store occupancy leverage.
Store expenses during the third quarter of fiscal 2022 increased
5.3% to $60.1 million. Store expenses
as a percentage of net sales was 22.6% during the third quarter of
fiscal 2022, up from 22.1% in the third quarter of fiscal 2021. The
increase in store expenses as a percentage of net sales was
primarily driven by higher labor expense as a result of increased
wage rates.
Administrative expenses during the third quarter of fiscal 2022
increased 2.6% to $7.5 million.
Administrative expenses as a percentage of net sales were 2.8% for
each of the third quarters of fiscal 2022 and 2021.
Operating income for the third quarter of fiscal 2022 was
$5.7 million, compared to
$7.0 million in the third quarter of
fiscal 2021. Operating margin during the third quarter of fiscal
2022 decreased to 2.1%, compared to 2.7% in the third quarter of
fiscal 2021.
Net income for the third quarter of fiscal 2022 was $3.9 million, or $0.17 diluted earnings per share, compared to net
income of $5.0 million, or
$0.22 diluted earnings per share for
the third quarter of fiscal 2021.
Adjusted EBITDA was $13.0 million
in the third quarter of fiscal 2022, compared to $14.6 million in the third quarter of fiscal
2021.
Operating Results — First Nine
Months of Fiscal 2022 Compared to First Nine Months of Fiscal
2021
During the first nine months of fiscal 2022, net sales increased
$32.6 million, or 4.2%, to
$815.4 million, compared to the first
nine months of fiscal 2021, due to a $27.6
million increase in comparable store sales and a
$5.8 million increase in new store
sales, partially offset by a $0.8
million decrease in sales from one store that closed at the
beginning of the third quarter of fiscal 2022. Daily average
comparable store sales increased 3.5% in the first nine months of
fiscal 2022, and was comprised of a 2.0% increase in daily average
transaction size and a 1.5% increase in daily average transaction
count. The increase in net sales was primarily driven by our
customers' response to pandemic trends, retail price inflation,
marketing initiatives, promotional campaigns, and increased
engagement in our {N}power® customer loyalty program.
Gross profit during the first nine months of fiscal 2022
increased 5.9% to $229.1 million,
primarily driven by increased sales volume. Gross profit reflects
earnings after product and occupancy expenses. Gross margin
increased 50 basis points to 28.1% during the first nine months of
fiscal 2022, compared to the first nine months of fiscal 2021. The
increase in gross margin was primarily driven by improved product
margin and store occupancy leverage.
Store expenses during the first nine months of fiscal 2022
increased 1.8% to $179.1 million.
Store expenses as a percentage of net sales was 22.0% during the
first nine months of fiscal 2022, down from 22.5% in the first nine
months of fiscal 2021. The reduction in store expenses as a
percentage of net sales reflects leverage attributed to higher
sales and a more normalized operating environment compared to the
prior fiscal year period.
Administrative expenses during the first nine months of fiscal
2022 increased 9.5% to $22.9 million.
Administrative expenses as a percentage of net sales was 2.8%
during the first nine months of fiscal 2022, up from 2.7% in the
first nine months of fiscal 2021.
Operating income for the first nine months of fiscal 2022 was
$26.5 million, compared to
$19.0 million in the first nine
months of fiscal 2021. Operating margin during the first nine
months of fiscal 2022 increased to 3.3%, compared to 2.4% in the
first nine months of fiscal 2021.
Net income for the first nine months of fiscal 2022 was
$19.2 million, or $0.84 diluted earnings per share, compared to net
income of $13.4 million, or
$0.59 diluted earnings per share for
the first nine months of fiscal 2021.
Adjusted EBITDA was $48.6 million
in the first nine months of fiscal 2022, compared to $42.5 million in the first nine months of fiscal
2021.
Balance Sheet and Cash
Flow
As of June 30, 2022, the Company
had $19.9 million in cash and cash
equivalents, no outstanding borrowings on its $50.0 million revolving credit facility, and
$17.7 million outstanding on its term
loan facility.
During the first nine months of fiscal 2022, the Company
generated $29.5 million in cash from
operations and invested $18.0 million
in net capital expenditures, primarily for new and
relocated/remodeled stores.
Dividend Announcement
Today, the Company announced the declaration of a quarterly cash
dividend of $0.10 per common share.
The dividend will be paid on September 14,
2022 to stockholders of record at the close of business on
August 29, 2022.
Growth and Development
During the third quarter of fiscal 2022 the Company opened one
new store in Colorado, ending the
quarter with 162 stores in 20 states. Since June 30, 2022, the Company opened one new store
in South Dakota. As of
August 4, 2022, the Company has
signed leases for an additional five new stores planned to open in
fiscal years 2022 and beyond.
Fiscal 2022 Outlook
The Company is refining its fiscal 2022 new store openings,
comparable store sales and earnings per share outlook based upon
year-to-date performance and current trends, as well as the
uncertainty of the pandemic, and economic and inflationary factors.
The Company now expects:
|
Fiscal
2022 Outlook
|
Number of new
stores
|
3-4
|
Number of
relocations/remodels
|
2
|
Daily average
comparable store sales growth
|
2.0% to 3.0%
|
Diluted earnings per
share
|
$0.87 to
$0.96
|
|
|
Capital expenditures
(in millions)
|
$28 to $35
|
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 Q3 FY 2022 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 163 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 current
expectations and assumptions that are subject to risks and
uncertainties. All statements that are not statements of historical
fact are forward-looking statements. Actual results could differ
materially from those described in the forward-looking statements
because of factors such as risks and challenges related to the
pandemic and government mandates, the economy, inflationary and
deflationary trends, periods of recession, changes in the Company's
industry, business strategy, goals and expectations concerning the
Company's market position, future operations, margins,
profitability, capital expenditures, liquidity and capital
resources, future growth, the war in Ukraine, other financial and operating
information and other risks detailed in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2021 (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 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
June 30,
|
|
Nine months
ended
June 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net sales
|
|
$
|
266,309
|
|
258,624
|
|
815,419
|
|
782,867
|
|
Cost of goods sold and
occupancy costs
|
|
192,750
|
|
187,082
|
|
586,341
|
|
566,473
|
|
Gross
profit
|
|
73,559
|
|
71,542
|
|
229,078
|
|
216,394
|
|
Store
expenses
|
|
60,124
|
|
57,086
|
|
179,065
|
|
175,838
|
|
Administrative
expenses
|
|
7,459
|
|
7,273
|
|
22,924
|
|
20,935
|
|
Pre-opening
expenses
|
|
325
|
|
135
|
|
550
|
|
665
|
|
Operating
income
|
|
5,651
|
|
7,048
|
|
26,539
|
|
18,956
|
|
Interest expense,
net
|
|
(603)
|
|
(586)
|
|
(1,692)
|
|
(1,699)
|
|
Income before income
taxes
|
|
5,048
|
|
6,462
|
|
24,847
|
|
17,257
|
|
Provision for income
taxes
|
|
(1,115)
|
|
(1,430)
|
|
(5,642)
|
|
(3,889)
|
|
Net income
|
|
$
|
3,933
|
|
5,032
|
|
19,205
|
|
13,368
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share of
common stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.17
|
|
0.22
|
|
0.85
|
|
0.59
|
|
Diluted
|
|
$
|
0.17
|
|
0.22
|
|
0.84
|
|
0.59
|
|
Weighted average number
of shares of common stock
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,676,882
|
|
22,606,444
|
|
22,659,042
|
|
22,582,351
|
|
Diluted
|
|
22,854,754
|
|
22,711,067
|
|
22,812,692
|
|
22,719,555
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC
|
Consolidated Balance
Sheets
|
(Unaudited)
|
(Dollars in
thousands, except per share data)
|
|
|
|
June
30,
2022
|
|
September 30,
2021
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
19,916
|
|
23,678
|
|
Accounts receivable,
net
|
|
8,090
|
|
8,489
|
|
Merchandise
inventory
|
|
111,329
|
|
100,546
|
|
Prepaid expenses and
other current assets
|
|
4,216
|
|
2,914
|
|
Total current
assets
|
|
143,551
|
|
135,627
|
|
Property and equipment,
net
|
|
148,560
|
|
151,399
|
|
Other
assets:
|
|
|
|
|
|
Operating
lease assets, net
|
|
312,144
|
|
316,388
|
|
Finance
lease assets, net
|
|
46,056
|
|
39,367
|
|
Deposits
and other assets
|
|
460
|
|
530
|
|
Goodwill
and other intangible assets, net
|
|
13,470
|
|
11,768
|
|
Total other
assets
|
|
|
372,130
|
|
368,053
|
|
Total
assets
|
|
$
|
664,241
|
|
655,079
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
69,429
|
|
68,949
|
|
Accrued
expenses
|
|
22,451
|
|
26,589
|
|
Term loan facility,
current portion
|
|
1,750
|
|
1,750
|
|
Operating lease
obligations, current portion
|
|
34,297
|
|
33,308
|
|
Finance lease
obligations, current portion
|
|
3,403
|
|
3,176
|
|
Total current
liabilities
|
|
131,330
|
|
133,772
|
|
Long-term
liabilities:
|
|
|
|
|
|
Term loan facility,
net of current portion
|
|
15,938
|
|
21,938
|
|
Operating lease
obligations, net of current portion
|
|
299,056
|
|
301,895
|
|
Finance lease
obligations, net of current portion
|
|
46,716
|
|
39,450
|
|
Deferred income tax
liabilities, net
|
|
15,568
|
|
15,293
|
|
Total long-term liabilities
|
|
377,278
|
|
378,576
|
|
Total
liabilities
|
|
508,608
|
|
512,348
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.001
par value, 50,000,000 shares authorized, and 22,688,995
and 22,620,417 shares issued and outstanding at June 30, 2022 and
September 30, 2021
respectively
|
|
23
|
|
23
|
|
Additional paid-in
capital
|
|
57,783
|
|
57,289
|
|
Retained
earnings
|
|
97,827
|
|
85,419
|
|
Total stockholders' equity
|
|
155,633
|
|
142,731
|
|
Total liabilities and
stockholders' equity
|
|
$
664,241
|
|
655,079
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
|
Nine months ended
June 30,
|
|
|
|
|
2022
|
|
2021
|
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
19,205
|
|
13,368
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
21,088
|
|
22,462
|
|
Impairment of
long-lived assets and store closing costs
|
|
95
|
|
105
|
|
Loss on disposal of
property and equipment
|
|
57
|
|
294
|
|
Share-based
compensation
|
|
887
|
|
666
|
|
Deferred income tax
expense
|
|
274
|
|
1,816
|
|
Non-cash interest
expense
|
|
17
|
|
17
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
(Increase) decrease
in:
|
|
|
|
|
|
Accounts receivable,
net
|
|
(298)
|
|
515
|
|
Merchandise
inventory
|
|
(10,783)
|
|
(187)
|
|
Prepaid expenses and
other assets
|
|
(1,088)
|
|
(1,166)
|
|
Income tax
receivable
|
|
(328)
|
|
3,004
|
|
Operating lease
assets
|
|
23,795
|
|
23,220
|
|
(Decrease) increase
in:
|
|
|
|
|
|
Operating lease
liabilities
|
|
(20,974)
|
|
(23,893)
|
|
Accounts
payable
|
|
1,696
|
|
(9,310)
|
|
Accrued
expenses
|
|
(4,138)
|
|
102
|
|
Net cash provided by
operating activities
|
|
29,505
|
|
31,013
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(15,925)
|
|
(15,514)
|
|
Acquisition of other
intangibles
|
|
(2,293)
|
|
(1,393)
|
|
Proceeds from sale of
property and equipment
|
|
16
|
|
30
|
|
Proceeds from property
insurance settlements
|
|
184
|
|
85
|
|
Net cash used in
investing activities
|
|
(18,018)
|
|
(16,792)
|
|
Financing
activities:
|
|
|
|
|
|
Borrowings under
revolving facility
|
|
6,100
|
|
11,800
|
|
Repayments under
revolving facility
|
|
(6,100)
|
|
(11,800)
|
|
Borrowings under term
loan facility
|
|
—
|
|
35,000
|
|
Repayments under term
loan facility
|
|
(6,000)
|
|
(10,875)
|
|
Finance lease
obligation payments
|
|
(2,059)
|
|
(2,102)
|
|
Dividends to
shareholders
|
|
(6,797)
|
|
(49,870)
|
|
Loan fees
paid
|
|
—
|
|
(53)
|
|
Payments on
withholding tax for restricted stock unit vesting
|
|
(393)
|
|
(332)
|
|
Net cash used in
financing activities
|
|
(15,249)
|
|
(28,232)
|
|
Net decrease in cash
and cash equivalents
|
|
(3,762)
|
|
(14,011)
|
|
Cash and cash
equivalents, beginning of period
|
|
23,678
|
|
28,534
|
|
Cash and cash
equivalents, end of period
|
|
$
|
19,916
|
|
14,523
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
418
|
|
203
|
|
Cash paid for interest
on finance lease obligations, net of capitalized interest of
$222 and $138, respectively
|
|
1,340
|
|
1,339
|
|
Income taxes
paid
|
|
5,315
|
|
5,362
|
|
Supplemental
disclosures of non-cash investing and financing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment not yet paid
|
|
$
|
3,642
|
|
2,996
|
|
Acquisition of other
intangibles not yet paid
|
|
|
231
|
|
214
|
|
Property acquired
through operating lease obligations
|
|
|
19,645
|
|
9,212
|
|
Property acquired
through finance lease obligations
|
|
|
9,726
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Non-GAAP Financial
Measures
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(Unaudited)
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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, lease exit costs,
share-based compensation and non-recurring items. The adjustments
to EBITDA for the nine months ended June 30,
2022 included $0.1 million in
operating lease asset impairment charges as a result of an early
store relocation. The adjustments to EBITDA for the nine months
ended June 30, 2021 included
$0.4 million in lease exit costs
associated with one store that closed in fiscal year 2019.
The following table reconciles net income to EBITDA and Adjusted
EBITDA, dollars in thousands:
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Three months
ended
June 30,
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Nine months
ended
June 30,
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2022
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2021
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2022
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2021
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Net income
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$
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3,933
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5,032
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19,205
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13,368
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Interest expense,
net
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603
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586
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1,692
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1,699
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Provision for income
taxes
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1,115
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1,430
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5,642
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3,889
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Depreciation and
amortization
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7,068
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7,405
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21,088
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22,462
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EBITDA
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12,719
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14,453
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47,627
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41,418
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Impairment of long-lived assets and store
closing costs
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—
297
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—
179
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95
887
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405
666
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Share-based compensation
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Adjusted EBITDA
(1)
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$
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13,016
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14,632
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48,609
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42,489
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(1)
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Adjusted EBITDA for the
three and nine months ended June 30, 2021, as presented, has been
recast to exclude share-based compensation to enhance the
comparability of this measure between fiscal periods.
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EBITDA decreased 12.0% to $12.7
million for the three months ended June 30, 2022 compared to $14.5 million for the three months ended
June 30, 2021. EBITDA increased 15.0%
to $47.6 million for the nine months
ended June 30, 2022 compared to
$41.4 million for the nine months
ended June 30, 2021. EBITDA as a
percentage of net sales was 4.8% and 5.6% for the three months
ended June 30, 2022 and 2021,
respectively. EBITDA as a percentage of net sales was 5.8% and 5.3%
for the nine months ended June 30,
2022 and 2021, respectively.
Adjusted EBITDA decreased 11.0% to $13.0
million for the three months ended June 30, 2022 compared to $14.6 million for the three months ended
June 30, 2021. Adjusted EBITDA
increased 14.4% to $48.6 million for
the nine months ended June 30, 2022
compared to $42.5 million for the
nine months ended June 30, 2021.
Adjusted EBITDA as a percentage of net sales was 4.9% and 5.7% for
the three months ended June 30, 2022
and 2021, respectively. Adjusted EBITDA as a percentage of net
sales was 6.0% and 5.4% for the nine months ended June 30, 2022 and 2021, respectively.
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. Commencing with its
financial reporting for fiscal year 2021, the Company revised its
definition of Adjusted EBITDA to exclude share-based compensation.
The Company's historical presentation of Adjusted EBITDA, including
for the three and nine months ended June 30,
2021, did not exclude share-based compensation. However,
Adjusted EBITDA for the three and nine months ended June 30, 2021, as presented in this release, has
been recast to exclude share-based compensation to enhance the
comparability of this measure between fiscal periods. Management
believes that excluding share-based compensation from Adjusted
EBITDA will enhance investors' ability to assess period-to-period
comparisons of the Company's operating performance and make more
meaningful comparisons between our operating performance and the
operating performance of our competitors.
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 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.