LAKEWOOD, Colo., May 6, 2021 /PRNewswire/ -- Natural Grocers
by Vitamin Cottage, Inc. (NYSE: NGVC) today announced results for
its second quarter of fiscal 2021 ended March 31, 2021 and confirmed its outlook for
fiscal 2021.
Highlights for Second Quarter Fiscal 2021 Compared to Second
Quarter Fiscal 2020
- Net sales decreased 6.6% to $259.2
million;
- Daily average comparable store sales decreased 7.0%;
- Daily average comparable store sales on a two-year stacked
basis increased 10.0%;
- Operating income was $6.7 million
compared to $13.3 million;
- Diluted earnings per share was $0.21 compared to $0.43;
- Adjusted EBITDA was $14.1 million
compared to $21.1 million; and
- Opened one new store and remodeled one store, resulting in a
2.5% new store growth rate for the twelve-month period ended
March 31, 2021.
"We delivered earnings within our expectations despite severe
weather-related challenges and lapping extremely difficult
comparisons due to the initial pandemic sales surge we experienced
in the second quarter of fiscal 2020," said Kemper Isely, Co-President. "Our strong
engagement with our customers and communities, coupled with our
steadfast focus on providing the highest quality, healthy foods at
an Always Affordable PriceSM continues to resonate with
consumers. We are grateful for the commitment of all of our
good4uSM Crew members and we continue to prioritize the
safety of our customers and crew amidst the COVID-19 pandemic."
Operating Results — Second Quarter Fiscal 2021 Compared to
Second Quarter Fiscal 2020
During the second quarter of fiscal 2021, net sales decreased
$18.3 million, or 6.6%, to
$259.2 million, compared to the same
period in fiscal 2020, driven by a $22.1
million decrease in comparable store sales and a
$3.8 million increase in new store
sales. Daily average comparable store sales decreased 7.0% in the
second quarter of fiscal 2021, compared to a 17.0% increase in the
second quarter of fiscal 2020. On a two-year stacked basis, daily
average comparable store sales increased 10.0%. The daily average
comparable store sales decrease during the second quarter of fiscal
2021 reflected a 13.9% decrease in daily average transaction count,
partially offset by an 8.0% increase in daily average transaction
size. This reflects a continuation of the trends the Company
experienced over the last year as customers practiced social
distancing efforts with larger but less frequent shopping trips.
The decrease in net sales during the second quarter of fiscal 2021
was primarily a result of unprecedented net sales in the second
quarter of 2020 as customers pantry loaded at the onset of the
COVID-19 pandemic, which contributed to a daily average comparable
store sales increase in March of 2020 of approximately 40%.
Additionally, severe cold and ice storms during February disrupted
our operations in many of our South Central and Pacific Northwest
markets, adversely impacting the second quarter daily average
comparable store sales by an estimated 70 basis points.
Gross profit during the second quarter of fiscal 2021 decreased
7.7%, to $71.8 million. Gross profit
reflects earnings after both product and occupancy expenses. Gross
margin decreased to 27.7% during the second quarter of fiscal 2021,
compared to 28.0% in the second quarter of fiscal 2020. The
decrease in gross margin was primarily driven by occupancy
deleverage, reflecting decreased sales volume, partially offset by
a modest improvement in product margin.
Store expenses during the second quarter of fiscal 2021
increased 2.7%, to $58.4 million.
Store expenses as a percentage of net sales increased to 22.5%
during the second quarter of fiscal 2021, compared to 20.5% in the
second quarter of fiscal 2020. The increase in store expenses as a
percentage of net sales was attributed to the deleverage associated
with the decrease in sales volume and increased labor-related
expenses.
Administrative expenses decreased 9.7% to $6.4 million during the second quarter of fiscal
2021. Administrative expenses as a percentage of net sales were
2.5% during the second quarter of fiscal 2021, consistent with the
second quarter of fiscal 2020.
Operating income decreased 49.4% to $6.7
million during the second quarter of fiscal 2021, compared
to $13.3 million in the comparable
period in fiscal 2020. Operating margin during the second quarter
of fiscal 2021 decreased to 2.6%, compared to 4.8% in the same
period in fiscal 2020.
Net income for the second quarter of fiscal 2021 was
$4.7 million, or $0.21 of diluted earnings per share, compared to
net income of $9.7 million, or
$0.43 of diluted earnings per share
for the second quarter of fiscal 2020.
Adjusted EBITDA was $14.1 million
in the second quarter of fiscal 2021, compared to $21.1 million in the second quarter of fiscal
2020.
Operating Results — First Half of Fiscal 2021 Compared to
First Half of Fiscal 2020
During the first half of fiscal 2021, net sales increased
$16.7 million, or 3.3%, to
$524.2 million, compared to the first
half of fiscal 2020, primarily driven by a $7.1 million increase in comparable store sales
and a $9.6 million increase in new
store sales. Daily average comparable store sales increased 2.0% in
the first half of fiscal 2021, compared to a 9.7% increase in the
first half of fiscal 2020. On a two-year stacked basis, daily
average comparable store sales increased 11.7%. The daily average
comparable store sales increase during the first half of fiscal
2021 reflected a 14.1% increase in daily average transaction size,
partially offset by a 10.6% decrease in daily average transaction
count. The primary driver of increased sales during the
first half of fiscal 2021 was our customers' response to the
COVID-19 pandemic and government related mandates, partially offset
by the adverse impact of severe cold and ice storms on our
operations in the South Central and Pacific Northwest markets. Also
contributing to the increase in net sales were positive
contributions from continuing marketing initiatives, promotional
campaigns and increased membership in and usage of the {N}power®
customer loyalty program.
Gross profit during the first half of fiscal 2021 increased 4.7%
to $144.9 million. Gross profit
reflects earnings after both product and occupancy expenses. Gross
margin was 27.6% for the first half of fiscal 2021, compared to
27.3% for the first half of fiscal 2020. The increase in gross
margin was primarily a result of an improved product margin, and
decreases in store occupancy and shrink expenses, as a percentage
of net sales.
Store expenses during the first half of fiscal 2021 increased
9.6%, to $118.8 million. Store
expenses as a percentage of net sales increased to 22.7% during the
first half of fiscal 2021, compared to 21.3% in the first half of
fiscal 2020. The increase in store expenses, as a percentage of net
sales, during the first half of fiscal 2021 was due primarily to
increased labor-related expenses.
Administrative expenses during the first half of fiscal 2021
increased 6.3% to $13.7 million.
Administrative expenses as a percentage of net sales were 2.6%
during the first half of fiscal 2021, compared to 2.5% in the first
half of fiscal 2020.
Operating income decreased 26.1% to $11.9
million during the first half of fiscal 2021, compared to
$16.1 million in the first half of
fiscal 2020. Operating margin decreased to 2.3%, compared to 3.2%
in the first half of fiscal 2020.
Net income for the first half of fiscal 2021 was $8.3 million, or $0.37 of diluted earnings per share, compared to
$11.6 million, or $0.51 of diluted earnings per share for the first
half of fiscal 2020.
Adjusted EBITDA was $27.4 million
in the first half of fiscal 2021, compared to $31.7 million in the first half of fiscal
2020.
Balance Sheet and Cash Flow
As of March 31, 2021, the Company
had $21.0 million in cash and cash
equivalents, no outstanding balance on the Company's $50.0 million revolving credit facility and
$34.6 million outstanding on the
fully drawn term loan facility.
During the first half of fiscal 2021, the Company generated
$17.3 million in cash from operations
and invested $9.5 million in net
capital expenditures.
Dividend Announcement
Today, the Company announced the declaration of a quarterly cash
dividend of $0.07 per common share.
The dividend will be paid on June 16,
2021 to all stockholders of record at the close of business
on June 1, 2021.
Growth and Development
During the second quarter of fiscal 2021, the Company opened one
new store and remodeled one store, ending the quarter with a total
store count of 161 stores in 20 states. The Company's one store
opening and one remodel during the second quarter of fiscal 2021,
compared to opening two new stores in the second quarter of fiscal
2020, resulting in 2.5% and 3.3% unit growth rates for the twelve
month periods ended March 31, 2021
and March 31, 2020, respectively.
As of May 6, 2021, the Company has
signed leases for five new stores, which will be located in
Colorado, Missouri, Nevada, and Oregon. These new stores are planned to open
during fiscal 2021 and beyond.
Fiscal 2021 Outlook
The Company is confirming its fiscal 2021 outlook, which was
previously announced on November 19,
2020, with the exception of lowering its expectations for
new store openings and store relocations/remodels during fiscal
2021. The adjustment in new store and relocation/remodel
expectations is driven by delays the Company is experiencing in the
construction process and equipment deliveries. The fiscal 2021
outlook reflects current trends in light of the rapidly evolving
COVID-19 environment and related government mandates. While the
Company cannot predict the duration or severity of the pandemic and
related government mandates, the Company expects these factors will
continue to impact its operations and financial performance through
fiscal 2021. The Company expects:
|
Fiscal
2021
Outlook
|
Number of new
stores
|
3-4
|
Number of
relocations/remodels
|
4-5
|
Daily average
comparable store sales growth
|
-2.0% to
2.0%
|
Diluted earnings per
share
|
$0.60 to
$0.70
|
|
|
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 1-800-670-8680 (US and Canada); or 1-303-223-4396 (International).
The conference ID is 21993602. A simultaneous audio webcast will be
available at http://Investors.NaturalGrocers.com and archived for a
minimum of 30 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, safe 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 161 stores
in 20 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
COVID-19 pandemic and government mandates, the economy, 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, 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,
2020 (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
March 31,
|
|
Six months
ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net sales
|
|
$
|
259,198
|
|
277,524
|
|
524,243
|
|
507,554
|
|
Cost of goods sold
and occupancy costs
|
|
187,371
|
|
199,701
|
|
379,391
|
|
369,207
|
|
Gross
profit
|
|
71,827
|
|
77,823
|
|
144,852
|
|
138,347
|
|
Store
expenses
|
|
58,422
|
|
56,878
|
|
118,752
|
|
108,305
|
|
Administrative
expenses
|
|
6,358
|
|
7,038
|
|
13,662
|
|
12,857
|
|
Pre-opening and
relocation expenses
|
|
341
|
|
650
|
|
530
|
|
1,080
|
|
Operating
income
|
|
6,706
|
|
13,257
|
|
11,908
|
|
16,105
|
|
Interest expense,
net
|
|
(603)
|
|
(516)
|
|
(1,113)
|
|
(1,052)
|
|
Income before income
taxes
|
|
6,103
|
|
12,741
|
|
10,795
|
|
15,053
|
|
Provision for income
taxes
|
|
(1,399)
|
|
(3,023)
|
|
(2,459)
|
|
(3,467)
|
|
Net income
|
|
$
|
4,704
|
|
9,718
|
|
8,336
|
|
11,586
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.21
|
|
0.43
|
|
0.37
|
|
0.52
|
|
Diluted
|
|
$
|
0.21
|
|
0.43
|
|
0.37
|
|
0.51
|
|
Weighted average
number of shares of common stock
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,581,916
|
|
22,493,341
|
|
22,570,305
|
|
22,482,285
|
|
Diluted
|
|
22,737,646
|
|
22,543,429
|
|
22,715,098
|
|
22,542,319
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share
data)
|
|
|
|
March
31,
2021
|
|
September 30,
2020
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
20,977
|
|
28,534
|
|
Accounts receivable,
net
|
|
8,996
|
|
8,519
|
|
Merchandise
inventory
|
|
98,456
|
|
100,175
|
|
Prepaid expenses and
other current assets
|
|
4,073
|
|
6,185
|
|
Total current
assets
|
|
132,502
|
|
143,413
|
|
Property and
equipment, net
|
|
146,364
|
|
147,929
|
|
Other
assets:
|
|
|
|
|
|
Operating lease
assets, net
|
|
330,514
|
|
339,239
|
|
Finance lease assets,
net
|
|
38,344
|
|
40,096
|
|
Deposits and other
assets
|
|
611
|
|
647
|
|
Goodwill and other
intangible assets, net
|
|
10,988
|
|
10,468
|
|
Total
other assets
|
|
380,457
|
|
390,450
|
|
Total
assets
|
|
$
|
659,323
|
|
681,792
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
64,026
|
|
69,163
|
|
Accrued
expenses
|
|
21,492
|
|
24,995
|
|
Term loan facility,
current portion
|
|
1,750
|
|
—
|
|
Operating lease
obligations, current portion
|
|
32,705
|
|
32,156
|
|
Finance lease
obligations, current portion
|
|
2,996
|
|
2,836
|
|
Total current
liabilities
|
|
122,969
|
|
129,150
|
|
Long-term
liabilities:
|
|
|
|
|
|
Term loan facility,
net of current portion
|
|
32,813
|
|
—
|
|
Operating lease
obligations, net of current portion
|
|
316,609
|
|
325,641
|
|
Finance lease
obligations, net of current portion
|
|
37,987
|
|
39,506
|
|
Deferred income tax
liabilities, net
|
|
15,518
|
|
14,429
|
|
Total long-term
liabilities
|
|
402,927
|
|
379,576
|
|
Total
liabilities
|
|
525,896
|
|
508,726
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.001
par value, 50,000,000 shares authorized,
and 22,595,467 and 22,546,765 shares issued
and outstanding
at March 31, 2021 and September 30, 2020, respectively
|
|
23
|
|
23
|
|
Additional paid-in
capital
|
|
57,065
|
|
56,752
|
|
Retained
earnings
|
|
76,339
|
|
116,291
|
|
Total stockholders'
equity
|
|
133,427
|
|
173,066
|
|
Total liabilities and
stockholders' equity
|
|
$
659,323
|
|
681,792
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
|
|
|
|
Six months ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
8,336
|
|
11,586
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
15,057
|
|
15,595
|
|
Impairment and store
closing costs
|
|
105
|
|
—
|
|
Share-based
compensation
|
|
487
|
|
552
|
|
Deferred income tax
expense
|
|
1,089
|
|
475
|
|
Non-cash interest
expense
|
|
11
|
|
6
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
(Increase) decrease
in:
|
|
|
|
|
|
Accounts receivable,
net
|
|
(477)
|
|
(535)
|
|
Merchandise
inventory
|
|
1,719
|
|
7,768
|
|
Prepaid expenses and
other assets
|
|
(922)
|
|
(483)
|
|
Income tax
receivable
|
|
3,004
|
|
4,960
|
|
Operating lease
asset
|
|
15,402
|
|
14,973
|
|
(Decrease) increase
in:
|
|
|
|
|
|
Operating lease
liability
|
|
(15,861)
|
|
(15,285)
|
|
Accounts
payable
|
|
(7,142)
|
|
10,146
|
|
Accrued
expenses
|
|
(3,503)
|
|
3,602
|
|
Net cash provided by
operating activities
|
|
17,305
|
|
53,360
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(8,673)
|
|
(18,759)
|
|
Acquisition of other
intangibles
|
|
(926)
|
|
(1,399)
|
|
Proceeds from sale of
property and equipment
|
|
—
|
|
—
|
|
Proceeds from property
insurance settlements
|
|
58
|
|
27
|
|
Net cash used in
investing activities
|
|
(9,541)
|
|
(20,131)
|
|
Financing
activities:
|
|
|
|
|
|
Borrowings under
revolving facility
|
|
—
|
|
226,000
|
|
Repayments under
revolving facility
|
|
—
|
|
(231,692)
|
|
Borrowings under term
loan facility
|
|
35,000
|
|
—
|
|
Repayments under term
loan facility
|
|
(438)
|
|
—
|
|
Finance lease
obligation payments
|
|
(1,369)
|
|
(1,082)
|
|
Dividend to
shareholders
|
|
(48,288)
|
|
(3,148)
|
|
Loan fees
paid
|
|
(52)
|
|
(25)
|
|
Payments on
withholding tax for restricted stock unit vesting
|
|
(174)
|
|
(122)
|
|
Net cash used in
financing activities
|
|
(15,321)
|
|
(10,069)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(7,557)
|
|
23,160
|
|
Cash and cash
equivalents, beginning of period
|
|
28,534
|
|
6,214
|
|
Cash and cash
equivalents, end of period
|
|
$
|
20,977
|
|
29,374
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
165
|
|
328
|
|
Cash paid for interest
on finance lease obligations, net of capitalized interest of $83
and $68, respectively
|
|
910
|
|
781
|
|
Income taxes
paid
|
|
4,777
|
|
10
|
|
Supplemental
disclosures of non-cash investing and financing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment not yet paid
|
|
$
|
4,435
|
|
3,748
|
|
Acquisition of other
intangibles not yet paid
|
|
|
233
|
|
179
|
|
Property acquired
through operating lease obligations
|
|
|
7,287
|
|
8,170
|
|
Property acquired
through finance lease obligations
|
|
|
106
|
|
5,232
|
|
Non-GAAP financial measures
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 and lease exit costs and
non-recurring items. The adjustment to EBITDA for the six
months ended March 31, 2021 related
to lease exit costs associated with one store that closed in the
first quarter of fiscal year 2019.
The following table reconciles net income to EBITDA and Adjusted
EBITDA, dollars in thousands:
|
|
Three months
ended
March 31,
|
|
Six months
ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income
|
|
$
|
4,704
|
|
9,718
|
|
8,336
|
|
11,586
|
|
Interest expense,
net
|
|
603
|
|
516
|
|
1,113
|
|
1,052
|
|
Provision for income
taxes
|
|
1,399
|
|
3,023
|
|
2,459
|
|
3,467
|
|
Depreciation and
amortization
|
|
7,420
|
|
7,888
|
|
15,057
|
|
15,595
|
|
EBITDA
|
|
|
14,126
|
|
21,145
|
|
26,965
|
|
31,700
|
|
Lease exit
costs
|
|
|
—
|
|
—
|
|
405
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
14,126
|
|
21,145
|
|
27,370
|
|
31,700
|
|
EBITDA decreased 33.2% to $14.1
million in the three months ended March 31, 2021, compared to $21.1 million for the three months ended
March 31, 2020. EBITDA
decreased 14.9% to $27.0 million in
the six months ended March 31, 2021,
compared to $31.7 million for the six
months ended March 31, 2020.
EBITDA as a percentage of net sales was 5.4% and 7.6% in the three
months ended March 31, 2021 and 2020,
respectively. EBITDA as a percentage of net sales was 5.1%
and 6.2% in the six months ended March 31,
2021 and 2020, respectively.
Adjusted EBITDA decreased 33.2% to $14.1
million in the three months ended March 31, 2021, compared to $21.1 million for the three months ended
March 31, 2020. Adjusted EBITDA
decreased 13.7% to $27.4 million in
the six months ended March 31, 2021,
compared to $31.7 million for the six
months ended March 31, 2020.
Adjusted EBITDA as a percentage of net sales was 5.4% and 7.6% in
the three months ended March 31, 2021
and 2020, respectively. Adjusted EBITDA as a percentage of
net sales was 5.2% and 6.2% in the six months ended March 31, 2021 and 2020, respectively.
Management believes some investors' understanding of our
performance is enhanced by including EBITDA and Adjusted EBITDA,
non-GAAP financial measures. We believe EBITDA and Adjusted
EBITDA provide additional information about: (i) our operating
performance, because it assists us in comparing the operating
performance of our stores on a consistent basis, as it removes 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 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
analysts' and investors' understanding of our business and our
results of operations, as well as assisting analysts and 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 measure of EBITDA and Adjusted
EBITDA may not be directly comparable to those of other companies.
Items excluded from 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 an analytical tool, and should
not be considered in isolation, or as an alternative to, 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 impact for single
lease 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;
- 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 a measure 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.