Reports 20th Consecutive Year of Positive
Comparable Store Sales Growth and Record
Earnings
Declares Special Cash Dividend of
$1.00 per Common Share
LAKEWOOD, Colo., Nov. 16,
2023 /PRNewswire/ -- Natural Grocers by Vitamin
Cottage, Inc. (NYSE: NGVC) today announced results for its fourth
quarter and fiscal year ended September 30,
2023 and provided its outlook for fiscal 2024.
Highlights for Fourth Quarter Fiscal 2023 Compared to Fourth
Quarter Fiscal 2022
- Net sales increased 7.6% to $295.1
million;
- Daily average comparable store sales increased 6.9%;
- Net income was $5.9 million, with
diluted earnings per share of $0.26;
- Adjusted EBITDA was $16.1
million; and
- The Board of Directors has declared a special cash dividend of
$1.00 per common share and a
quarterly cash dividend of $0.10 per
common share.
Highlights for Fiscal 2023 Compared to Fiscal 2022
- Net sales increased 4.7% to $1.1
billion;
- Daily average comparable store sales increased 3.6%;
- 20th consecutive year of positive comparable store
sales growth;
- Net income was $23.2 million,
with diluted earnings per share of $1.02;
- Adjusted EBITDA was $63.4
million; and
- Opened three new stores and relocated/remodeled three
stores.
"Our strong fourth quarter and fiscal year results were driven
by our differentiated business model and the responsiveness of our
team to industry dynamics. Our founding principles, especially our
commitment to offering only the highest quality natural and organic
products at Always AffordableSM prices, resonate
with consumers more than ever," said Kemper
Isely, Co-President. "Fourth quarter results were broadly
positive with daily average comparable store sales growth of 6.9%,
including a 3.6% increase in daily average transaction count, and a
100 basis point improvement in gross margin. Our crews' continued
execution of operational and marketing initiatives culminated in
our twentieth consecutive year of positive sales comp and record
earnings for the fiscal year. As we look ahead to fiscal 2024, we
remain focused on enhancing shareholder value by executing to our
founding principles, leveraging our differentiated model and
driving profitable growth."
Isely continued, "We are also proud to announce today that our
Board of Directors has declared a special cash dividend of
$1.00 per common share in addition to
a quarterly cash dividend of $0.10
per share, reflecting our strong operating trends, financial
position, confidence in our business outlook, and commitment to
returning value to our stockholders."
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 — Fourth Quarter Fiscal 2023 Compared to
Fourth Quarter Fiscal 2022
During the fourth quarter of fiscal 2023, net sales increased
$20.9 million, or 7.6%, to
$295.1 million, compared to the
fourth quarter of fiscal 2022, due to an $18.9 million increase in comparable store sales
and a $3.4 million increase in new
store sales, partially offset by a $1.4
million decrease in net sales related to stores closed
during the third quarter of fiscal 2023. Daily average comparable
store sales increased 6.9% in the fourth quarter of fiscal 2023,
comprised of a 3.6% increase in daily average transaction count and
a 3.3% increase in daily average transaction size. The increase in
net sales was driven by transaction count, retail price increases,
new store sales, and marketing initiatives, including
market-specific campaigns and {N}power® rewards program offers that
drove customer engagement.
Gross profit during the fourth quarter of fiscal 2023 increased
$8.5 million, or 11.3%, to
$84.3 million, compared to
$75.8 million in the fourth quarter
of fiscal 2022. Gross profit reflects earnings after product and
store occupancy costs. Gross margin increased 100 basis points to
28.6% during the fourth quarter of fiscal 2023, compared to 27.6%
in the fourth quarter of fiscal 2022. The increase in gross margin
was driven by higher product margin attributed to effective pricing
and promotions, partially offset by higher shrink expense.
Store expenses during the fourth quarter of fiscal 2023
increased $2.9 million, or 4.6%, to
$65.9 million. Store expenses as a
percentage of net sales were 22.3% during the fourth quarter of
fiscal 2023, down from 23.0% in the fourth quarter of fiscal 2022.
The decrease in store expenses as a percentage of net sales was
primarily driven by lower long-lived asset impairment charges.
Administrative expenses during the fourth quarter of fiscal 2023
increased $1.2 million, or 13.5%, to
$9.8 million, primarily driven by
higher compensation expenses, technology amortization and legal
expenses. Administrative expenses as a percentage of net sales were
3.3% and 3.2% for the fourth quarters of fiscal 2023 and 2022,
respectively.
Operating income for the fourth quarter of fiscal 2023 was
$7.7 million, compared to
$3.6 million in the fourth quarter of
fiscal 2022. Operating margin during the fourth quarter of fiscal
2023 was 2.6%, compared to 1.3% in the fourth quarter of fiscal
2022.
The effective income tax rate was 15.0% and 26.5% for the fourth
quarter of fiscal 2023 and 2022, respectively. The decrease in the
effective income tax rate was primarily attributable to increased
food donation deductions recorded during the fourth quarter of
fiscal 2023.
Net income for the fourth quarter of fiscal 2023 was
$5.9 million, or $0.26 diluted earnings per share, compared to net
income of $2.2 million, or
$0.09 diluted earnings per share, for
the fourth quarter of fiscal 2022.
Adjusted EBITDA for the fourth quarter of fiscal 2023 increased
18.5% to $16.1 million, compared to
$13.6 million in the fourth quarter
of fiscal 2022.
Operating Results — Fiscal 2023 Compared to Fiscal
2022
During fiscal 2023, net sales increased $50.9 million, or 4.7%, to $1,140.6 million, compared to fiscal 2022, due to
a $39.3 million increase in
comparable store sales and a $14.8
million increase in new store sales, partially offset by a
$3.2 million decrease in net sales
related to store closures. Daily average comparable store sales
increased 3.6% in fiscal 2023, and was comprised of a 1.8% increase
in daily average transaction size and a 1.7% increase in daily
average transaction count. The increase in net sales was primarily
driven by retail price increases, transaction count, new store
sales, and marketing initiatives, partially offset by a moderation
of the pandemic trends experienced in the first half of fiscal year
2022.
Gross profit during fiscal 2023 increased $22.1 million, or 7.2%, to $326.9 million. Gross profit reflects earnings
after product and occupancy expenses. Gross margin increased to
28.7% during fiscal 2023, up from 28.0% in fiscal 2022. The
increase in gross margin was driven by higher product margin
attributed to effective pricing and promotions, partially offset by
higher shrink expense.
Store expenses during fiscal 2023 increased $15.2 million, or 6.3%, to $257.3 million. Store expenses as a percentage of
net sales were 22.6% during fiscal 2023, up from 22.2% in fiscal
2022. The increase in store expenses as a percentage of net sales
was primarily driven by higher labor expenses as a result of
increased wage rates.
Administrative expenses during fiscal 2023 increased
$4.4 million, or 14.0%, to
$36.0 million. The increase in
administrative expenses was primarily driven by higher compensation
expenses, technology amortization, software expenses and legal
expenses. Administrative expenses as a percentage of net sales were
3.2% during fiscal 2023, up from 2.9% in fiscal 2022.
Operating income for fiscal 2023 was $31.7 million, compared to $30.2 million in fiscal 2022. Operating margin
was 2.8% for fiscal years 2023 and 2022.
The effective income tax rate was 18.1% and 23.1% for fiscal
2023 and 2022, respectively. The decrease in the effective income
tax rate was primarily attributable to increased food donation
deductions recorded during fiscal year 2023.
Net income for fiscal 2023 was $23.2
million, or $1.02 diluted
earnings per share, compared to net income of $21.4 million, or $0.94 diluted earnings per share for fiscal
2022.
Adjusted EBITDA for fiscal 2023 was $63.4
million, compared to $62.2
million in fiscal 2022.
Balance Sheet and Cash Flow
As of September 30, 2023, the
Company had $18.3 million in cash and
cash equivalents, no outstanding borrowings on its $50.0 million revolving credit facility, and
$7.7 million outstanding on its term
loan facility. Additionally, the Company today announced that it
has amended its credit agreement to increase the revolving credit
facility commitment to $75.0 million
and to extend the maturity date to November
16, 2028, further enhancing the Company's liquidity.
During fiscal 2023, the Company generated $64.6 million in cash from operations and
invested $38.0 million in net capital
expenditures, primarily for new and relocated stores.
Dividend Announcement
Today, the Company announced the declaration of a special cash
dividend of $1.00 per common share,
in addition to a quarterly cash dividend of $0.10 per common share. The special and quarterly
dividends will be paid on December 13,
2023 to stockholders of record at the close of business on
November 27, 2023. The special
dividend will be funded through available cash and borrowings under
the Company's revolving credit facility.
Growth and Development
During the fourth quarter of fiscal 2023 the Company opened one
new store and relocated/remodeled two stores, ending the fourth
quarter with 165 stores in 21 states. Since September 30, 2023, the Company has opened new
two stores. As of November 16, 2023,
the Company has signed leases for an additional two new stores that
are planned to open in fiscal years 2024 and beyond.
Fiscal 2024 Outlook
The Company is introducing its fiscal 2024 outlook reflecting
current operating trends, consumer trends, and the uncertainty of
the economic environment. The Company expects:
|
Fiscal
2024 Outlook
|
Number of new
stores
|
4-6
|
Number of
relocations/remodels
|
4-6
|
Daily average
comparable store sales growth
|
2.0% to 4.0%
|
Diluted earnings per
share
|
$1.00 to
$1.10
|
|
|
Capital expenditures
(in millions)
|
$30 to $39
|
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 Q4 FY 2023 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 167 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 management's
current expectations and are subject to uncertainty and changes in
circumstances. All statements that are not statements of historical
fact are forward-looking statements. Actual results could differ
materially from these expectations due to changes in global,
national, regional or local political, economic, inflationary,
deflationary, recessionary, business, interest rate, labor market,
competitive, market, regulatory and other factors, and other risks
detailed in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2022 (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
publicly 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
September 30,
|
|
Year ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net sales
|
|
$
|
295,075
|
|
274,206
|
|
1,140,568
|
|
1,089,625
|
|
Cost of goods sold and
occupancy costs
|
|
210,730
|
|
198,403
|
|
813,637
|
|
784,744
|
|
Gross
profit
|
|
84,345
|
|
75,803
|
|
326,931
|
|
304,881
|
|
Store
expenses
|
|
65,863
|
|
62,992
|
|
257,282
|
|
242,057
|
|
Administrative
expenses
|
|
9,807
|
|
8,638
|
|
35,973
|
|
31,562
|
|
Pre-opening
expenses
|
|
938
|
|
557
|
|
2,007
|
|
1,107
|
|
Operating
income
|
|
7,737
|
|
3,616
|
|
31,669
|
|
30,155
|
|
Interest expense,
net
|
|
(821)
|
|
(679)
|
|
(3,299)
|
|
(2,371)
|
|
Income before income
taxes
|
|
6,916
|
|
2,937
|
|
28,370
|
|
27,784
|
|
Provision for income
taxes
|
|
(1,036)
|
|
(777)
|
|
(5,127)
|
|
(6,419)
|
|
Net income
|
|
$
|
5,880
|
|
2,160
|
|
23,243
|
|
21,365
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share of
common stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.26
|
|
0.10
|
|
1.02
|
|
0.94
|
|
Diluted
|
|
$
|
0.26
|
|
0.09
|
|
1.02
|
|
0.94
|
|
Weighted average number
of shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,738,284
|
|
22,689,714
|
|
22,725,088
|
|
22,666,773
|
|
Diluted
|
|
22,945,750
|
|
22,838,786
|
|
22,834,316
|
|
22,816,614
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated Balance
Sheets
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
18,342
|
|
12,039
|
|
Accounts receivable,
net
|
|
10,797
|
|
10,496
|
|
Merchandise
inventory
|
|
119,260
|
|
113,756
|
|
Prepaid expenses and
other current assets
|
|
4,151
|
|
4,369
|
|
Total current
assets
|
|
152,550
|
|
140,660
|
|
Property and equipment,
net
|
|
169,060
|
|
157,179
|
|
Other
assets:
|
|
|
|
|
|
Operating lease
assets, net
|
|
287,941
|
|
307,132
|
|
Finance lease assets,
net
|
|
45,110
|
|
43,554
|
|
Deposits and other
assets
|
|
395
|
|
452
|
|
Goodwill and other
intangible assets, net
|
|
14,129
|
|
14,131
|
|
Total other
assets
|
|
347,575
|
|
365,269
|
|
Total
assets
|
|
$
|
669,185
|
|
663,108
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
80,675
|
|
71,283
|
|
Accrued
expenses
|
|
33,064
|
|
26,737
|
|
Term loan facility,
current portion
|
|
1,750
|
|
1,750
|
|
Operating lease
obligations, current portion
|
|
34,850
|
|
34,735
|
|
Finance lease
obligations, current portion
|
|
3,690
|
|
3,223
|
|
Total current
liabilities
|
|
154,029
|
|
137,728
|
|
Long-term
liabilities:
|
|
|
|
|
|
Term loan facility,
net of current portion
|
|
5,938
|
|
13,938
|
|
Operating lease
obligations, net of current portion
|
|
276,808
|
|
295,064
|
|
Finance lease
obligations, net of current portion
|
|
47,142
|
|
44,664
|
|
Deferred income tax
liabilities, net
|
|
14,427
|
|
15,902
|
|
Total long-term
liabilities
|
|
344,315
|
|
369,568
|
|
Total
liabilities
|
|
498,344
|
|
507,296
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.001
par value. 50,000,000 shares authorized, 22,745,412 and
22,690,188 shares issued at September 30,
2023 and 2022, and 22,738,915 and
22,690,188 shares outstanding at September 30,
2023 and 2022, respectively
|
|
23
|
|
23
|
|
Additional paid-in
capital
|
|
59,013
|
|
58,072
|
|
Retained
earnings
|
|
111,871
|
|
97,717
|
|
Common stock in
treasury at cost, 6,497 shares at September 30, 2023
|
|
(66)
|
|
—
|
|
Total stockholders'
equity
|
|
170,841
|
|
155,812
|
|
Total liabilities and
stockholders' equity
|
|
$
|
669,185
|
|
663,108
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated
Statements of Cash Flows
(Unaudited)
(Dollars in
thousands)
|
|
|
|
Year ended September
30,
|
|
|
|
2023
|
|
2022
|
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
23,243
|
|
21,365
|
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
28,906
|
|
27,906
|
|
|
Impairment of
long-lived assets and store closing costs
|
|
1,268
|
|
2,920
|
|
|
Loss on disposal of
property and equipment
|
|
379
|
|
78
|
|
|
Share-based
compensation
|
|
1,360
|
|
1,186
|
|
|
Deferred income tax
(benefit) expense
|
|
(1,475)
|
|
609
|
|
|
Non-cash interest
expense
|
|
19
|
|
22
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Decrease (increase)
in:
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
315
|
|
(2,973)
|
|
|
Income tax
receivable
|
|
378
|
|
(631)
|
|
|
Merchandise
inventory
|
|
(5,504)
|
|
(13,210)
|
|
|
Prepaid expenses and
other assets
|
|
(128)
|
|
(1,025)
|
|
|
Operating lease
assets
|
|
33,067
|
|
31,895
|
|
|
(Decrease) increase
in:
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
(33,899)
|
|
(29,044)
|
|
|
Accounts
payable
|
|
10,350
|
|
447
|
|
|
Accrued
expenses
|
|
6,327
|
|
148
|
|
|
Net cash provided by
operating activities
|
|
64,606
|
|
39,693
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(36,568)
|
|
(28,038)
|
|
|
Acquisition of other
intangibles
|
|
(1,525)
|
|
(3,406)
|
|
|
Proceeds from sale of
property and equipment
|
|
107
|
|
21
|
|
|
Proceeds from property
insurance settlements
|
|
36
|
|
280
|
|
|
Net cash used in
investing activities
|
|
(37,950)
|
|
(31,143)
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Borrowings under
revolving facility
|
|
531,100
|
|
129,000
|
|
|
Repayments under
revolving facility
|
|
(531,100)
|
|
(129,000)
|
|
|
Repayments under term
loan facility
|
|
(8,000)
|
|
(8,000)
|
|
|
Finance lease
obligation payments
|
|
(2,779)
|
|
(2,719)
|
|
|
Dividends to
shareholders
|
|
(9,089)
|
|
(9,067)
|
|
|
Repurchase of common
stock
|
|
(181)
|
|
—
|
|
|
Payments on
withholding tax for restricted stock unit vesting
|
|
(304)
|
|
(403)
|
|
|
Net cash used in
financing activities
|
|
(20,353)
|
|
(20,189)
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
6,303
|
|
(11,639)
|
|
|
Cash and cash
equivalents, beginning of year
|
|
12,039
|
|
23,678
|
|
|
Cash and cash
equivalents, end of year
|
|
$
|
18,342
|
|
12,039
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
1,305
|
|
627
|
|
|
Cash paid for interest
on financing lease obligations, net of capitalized interest of $318
and $313,
respectively
|
|
2,002
|
|
1,801
|
|
|
Income taxes
paid
|
|
5,048
|
|
7,012
|
|
|
Supplemental
disclosures of non-cash investing and financing
activities:
|
|
|
|
|
|
|
Acquisition of
property and equipment not yet paid
|
|
$
|
6,016
|
|
6,965
|
|
|
Acquisition of other
intangibles not yet paid
|
|
3
|
|
12
|
|
|
Property acquired
through operating lease obligations
|
|
15,274
|
|
24,429
|
|
|
Property acquired
through finance lease obligations
|
|
5,724
|
|
9,625
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
|
Non-GAAP Financial
Measures
|
(Unaudited)
|
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, share-based compensation
and non-recurring items.
The following table reconciles net income to EBITDA and Adjusted
EBITDA, dollars in thousands:
|
|
Three months
ended
September 30,
|
|
Year ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net income
|
|
$
|
5,880
|
|
2,160
|
|
23,243
|
|
21,365
|
|
Interest expense,
net
|
|
821
|
|
679
|
|
3,299
|
|
2,371
|
|
Provision for income
taxes
|
|
1,036
|
|
777
|
|
5,127
|
|
6,419
|
|
Depreciation and
amortization
|
|
7,480
|
|
6,818
|
|
28,906
|
|
27,906
|
|
EBITDA
|
|
|
15,217
|
|
10,434
|
|
60,575
|
|
58,061
|
|
Impairment of
long-lived assets and store closing costs
|
|
|
534
|
|
2,825
|
|
1,464
|
|
2,920
|
|
Share-based
compensation
|
|
314
|
|
299
|
|
1,360
|
|
1,186
|
|
Adjusted
EBITDA
|
|
$
|
16,065
|
|
13,558
|
|
63,399
|
|
62,167
|
|
EBITDA increased 45.8% to $15.2
million for the fourth quarter of fiscal 2023 compared to
$10.4 million for the fourth quarter
of fiscal 2022. EBITDA increased 4.3% to $60.6 million for fiscal 2023 compared to
$58.1 million for fiscal 2022. EBITDA
as a percentage of net sales was 5.2% and 3.8% for the fourth
quarter of 2023 and 2022, respectively. EBITDA as a percentage of
net sales was 5.3% for both fiscal 2023 and 2022.
Adjusted EBITDA increased 18.5% to $16.1
million for the fourth quarter of fiscal 2023 compared to
$13.6 million for the fourth quarter
of fiscal 2022. Adjusted EBITDA increased 2.0% to $63.4 million for fiscal 2023 compared to
$62.2 million for fiscal 2022.
Adjusted EBITDA as a percentage of net sales was 5.4% and 4.9% for
the fourth quarter of fiscal 2023 and 2022, respectively. Adjusted
EBITDA as a percentage of net sales was 5.6% and 5.7% for fiscal
2023 and 2022, 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.
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 charges, 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.