LAKEWOOD, Colo., May 5, 2022 /PRNewswire/ -- Natural Grocers
by Vitamin Cottage, Inc. (NYSE: NGVC) today announced results for
its second quarter of fiscal 2022 ended March 31, 2022 and raised its outlook for fiscal
2022.
Highlights for Second Quarter Fiscal 2022 Compared to Second
Quarter Fiscal 2021
- Net sales increased 4.9% to $271.8
million;
- Daily average comparable store sales increased 4.3%;
- Operating income increased 32.2% to $8.9
million;
- Net income increased 35.1% to $6.4
million;
- Diluted earnings per share was $0.28, up 33.3% from $0.21 in the second quarter of fiscal 2021;
and
- Adjusted EBITDA increased 11.8% to $16.1
million.
"We delivered strong results in the second quarter including a
4.3% increase in daily average comparable store sales, a 50 basis
point improvement in gross margin, and 33.3% growth in diluted
earnings per share compared to the second quarter of last year,"
said Kemper Isely, Co-President. "We
are also pleased with our transaction count comp trends which have
had a positive year over year increase for four consecutive
quarters. We believe the enduring strength of our business model is
reflected in the 13.5% increase in daily average comparable store
sales versus the second quarter of 2019. Sales growth continues to
be driven by consumers' robust demand for our high-quality natural
and organic products at always affordable prices™. Our crew
members' commitment to operational execution and exceptional
customer service were instrumental in driving our strong
performance."
Mr. Isely continued, "Our second quarter results also underscore
the agility of our operating model to quickly adapt to changes in
the operating environment, including challenges related to the
pandemic, labor availability and the supply chain constraints that
many retailers also experienced during this time frame. The strong
financial performance in the first half of the fiscal year and our
expectations for the second half of the fiscal year give us
confidence in raising our fiscal year 2022 outlook."
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 — Second Quarter Fiscal 2022 Compared to
Second Quarter Fiscal 2021
During the second quarter of fiscal 2022, net sales increased
$12.6 million, or 4.9%, to
$271.8 million, compared to the
second quarter of fiscal 2021, due to an $11.1 million increase in comparable store sales
and a $1.5 million increase in new
store sales. Daily average comparable store sales increased 4.3% in
the second quarter of fiscal 2022, and was comprised of a 2.5%
increase in daily average transaction size and a 1.8% increase in
daily average transaction count. The increase in net sales was
primarily driven by our customers' response to COVID-19 pandemic
trends early in the quarter, retail price inflation, marketing
initiatives, promotional campaigns and increased engagement in our
{N}power® customer loyalty program.
Gross profit during the second quarter of fiscal 2022 increased
6.9% to $76.8 million, primarily
driven by increased sales volume. Gross profit reflects earnings
after product and occupancy expenses. Gross margin increased to
28.2% during the second quarter of fiscal 2022, compared to 27.7%
in the second quarter of fiscal 2021. The increase in gross margin
was primarily driven by improved product margin and store occupancy
leverage.
Store expenses during the second quarter of fiscal 2022
increased 2.0% to $59.6 million.
Store expenses as a percentage of net sales was 21.9% during the
second quarter of fiscal 2022, down from 22.5% in the second
quarter of fiscal 2021. The reduction in store expenses as a
percentage of net sales reflects leverage created by higher sales
and a more normalized operating environment compared to the prior
fiscal year period.
Administrative expenses during the second quarter of fiscal 2022
increased 28.5% to $8.2 million.
Administrative expenses as a percentage of net sales were 3.0%
during the second quarter of fiscal 2022, up from 2.5% in the
second quarter of fiscal 2021.
Operating income for the second quarter of fiscal 2022 increased
32.2% to $8.9 million, compared to
$6.7 million in the second quarter of
fiscal 2021. Operating margin during the second quarter of fiscal
2022 increased to 3.3%, compared to 2.6% in the second quarter of
fiscal 2021.
Net income for the second quarter of fiscal 2022 increased 35.1%
to $6.4 million, or $0.28 diluted earnings per share, compared to net
income of $4.7 million, or
$0.21 diluted earnings per share for
the second quarter of fiscal 2021.
Adjusted EBITDA increased 11.8% to $16.1
million in the second quarter of fiscal 2022, compared to
$14.4 million in the second quarter
of fiscal 2021.
Operating Results — First Six Months of Fiscal 2022 Compared
to First Six Months of Fiscal 2021
During the first six months of fiscal 2022, net sales increased
$24.9 million, or 4.7%, to
$549.1 million, compared to the first
six months of fiscal 2021, due to a $21.3
million increase in comparable store sales and a
$3.6 million increase in new store
sales. Daily average comparable store sales increased 4.1% in the
first six months of fiscal 2022, and was comprised of a 2.4%
increase in daily average transaction count and a 1.6% increase in
daily average transaction size. The increase in net sales was
primarily driven by our customers' response to COVID-19 pandemic
trends, retail price inflation, marketing initiatives, promotional
campaigns, and increased engagement in our {N}power® customer
loyalty program.
Gross profit during the first six months of fiscal 2022
increased 7.4% to $155.5 million,
primarily driven by increased sales volume. Gross profit reflects
earnings after product and occupancy expenses. Gross margin
increased to 28.3% during the first six months of fiscal 2022,
compared to 27.6% in the first six 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 six months of fiscal 2022
increased 0.2% to $118.9 million.
Store expenses as a percentage of net sales was 21.7% during the
first six months of fiscal 2022, down from 22.7% in the first six
months of fiscal 2021. The reduction in store expenses as a
percentage of net sales reflects leverage created by higher sales
and a more normalized operating environment compared to the prior
fiscal year period.
Administrative expenses during the first six months of fiscal
2022 increased 13.2% to $15.5
million. Administrative expenses as a percentage of net
sales were 2.8% during the first six months of fiscal 2022, up from
2.6% in the first six months of fiscal 2021.
Operating income for the first six months of fiscal 2022
increased 75.4% to $20.9 million,
compared to $11.9 million in the
first six months of fiscal 2021. Operating margin during the first
six months of fiscal 2022 increased to 3.8%, compared to 2.3% in
the first six months of fiscal 2021.
Net income for the first six months of fiscal 2022 increased
83.2% to $15.3 million, or
$0.67 diluted earnings per share,
compared to net income of $8.3
million, or $0.37 diluted
earnings per share for the first six months of fiscal 2021.
Adjusted EBITDA increased 27.8% to $35.6
million in the first six months of fiscal 2022, compared to
$27.9 million in the first six months
of fiscal 2021.
Balance Sheet and Cash Flow
As of March 31, 2022, the Company
had $28.9 million in cash and cash
equivalents, no outstanding borrowings on its $50.0 million revolving credit facility, and
$19.7 million outstanding on its term
loan facility.
During the first six months of fiscal 2022, the Company
generated $27.6 million in cash from
operations and invested $12.3 million
in net capital expenditures, primarily for new and
relocated/remodeled stores.
Dividend and Share Repurchase Program Announcements
Today, the Company announced the declaration of a quarterly cash
dividend of $0.10 per common share.
The dividend will be paid on June 15,
2022 to stockholders of record at the close of business on
May 31, 2022.
The Company also announced that its Board of Directors
authorized an extension of the Company's share repurchase program.
The share repurchase program will now terminate on May 31, 2024. The dollar value of the shares of
the Company's common stock that may yet be repurchased under the
share repurchase program is approximately $8.3 million.
Growth and Development
The Company ended the second quarter of fiscal 2022 with 162
stores in 20 states. As of May 5,
2022, the Company has signed leases or acquired property for
an additional six new stores planned to open in fiscal years 2022
and beyond.
Fiscal 2022 Outlook
The Company is raising its fiscal 2022 comparable store sales
growth and diluted earnings per share outlook based upon year to
date performance and current trends. The updated outlook takes into
consideration the uncertainty of the COVID-19 pandemic, economic
and inflationary factors, and supply chain constraints, which are
expected to impact the Company's operations and financial
performance through the end of fiscal 2022. The Company now
expects:
|
Fiscal
2022
Outlook
|
Number of new
stores
|
4-5
|
Number of
relocations/remodels
|
2
|
Daily average
comparable store sales growth
|
1.0% to
3.0%
|
Diluted earnings per
share
|
$0.85 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 Q2 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 162 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,
inflationary and deflationary trends, 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,
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
March 31,
|
|
Six months
ended
March 31,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net sales
|
|
$
|
271,822
|
|
259,198
|
|
549,110
|
|
524,243
|
|
Cost of goods sold
and occupancy costs
|
|
195,040
|
|
187,371
|
|
393,591
|
|
379,391
|
|
Gross
profit
|
|
76,782
|
|
71,827
|
|
155,519
|
|
144,852
|
|
Store
expenses
|
|
59,605
|
|
58,422
|
|
118,941
|
|
118,752
|
|
Administrative
expenses
|
|
8,172
|
|
6,358
|
|
15,465
|
|
13,662
|
|
Pre-opening
expenses
|
|
141
|
|
341
|
|
225
|
|
530
|
|
Operating
income
|
|
8,864
|
|
6,706
|
|
20,888
|
|
11,908
|
|
Interest expense,
net
|
|
(545)
|
|
(603)
|
|
(1,089)
|
|
(1,113)
|
|
Income before income
taxes
|
|
8,319
|
|
6,103
|
|
19,799
|
|
10,795
|
|
Provision for income
taxes
|
|
(1,962)
|
|
(1,399)
|
|
(4,527)
|
|
(2,459)
|
|
Net income
|
|
$
|
6,357
|
|
4,704
|
|
15,272
|
|
8,336
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
of common stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.28
|
|
0.21
|
|
0.67
|
|
0.37
|
|
Diluted
|
|
$
|
0.28
|
|
0.21
|
|
0.67
|
|
0.37
|
|
Weighted average
number of shares of common stock
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,660,477
|
|
22,581,916
|
|
22,650,123
|
|
22,570,305
|
|
Diluted
|
|
22,819,526
|
|
22,737,646
|
|
22,790,114
|
|
22,715,098
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC. Consolidated Balance Sheets
(Unaudited) (Dollars in thousands, except per share
data)
|
|
|
|
March
31,
2022
|
|
September 30,
2021
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
28,889
|
|
23,678
|
|
Accounts receivable,
net
|
|
6,207
|
|
8,489
|
|
Merchandise
inventory
|
|
106,650
|
|
100,546
|
|
Prepaid expenses and
other current assets
|
|
3,462
|
|
2,914
|
|
Total current
assets
|
|
145,208
|
|
135,627
|
|
Property and
equipment, net
|
|
147,786
|
|
151,399
|
|
Other
assets:
|
|
|
|
|
|
Operating lease assets, net
|
|
307,078
|
|
316,388
|
|
Finance lease assets, net
|
|
41,508
|
|
39,367
|
|
Deposits and other assets
|
|
475
|
|
530
|
|
Goodwill and other intangible assets, net
|
|
13,045
|
|
11,768
|
|
Total
other assets
|
|
362,106
|
|
368,053
|
|
Total
assets
|
|
$
|
655,100
|
|
655,079
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
68,028
|
|
68,949
|
|
Accrued
expenses
|
|
24,903
|
|
26,589
|
|
Term loan facility,
current portion
|
|
1,750
|
|
1,750
|
|
Operating lease
obligations, current portion
|
|
33,836
|
|
33,308
|
|
Finance lease
obligations, current portion
|
|
3,313
|
|
3,176
|
|
Total current
liabilities
|
|
131,830
|
|
133,772
|
|
Long-term
liabilities:
|
|
|
|
|
|
Term loan facility,
net of current portion
|
|
17,938
|
|
21,938
|
|
Operating lease
obligations, net of current portion
|
|
294,146
|
|
301,895
|
|
Finance lease
obligations, net of current portion
|
|
41,940
|
|
39,450
|
|
Deferred income tax
liabilities, net
|
|
15,401
|
|
15,293
|
|
Total long-term liabilities
|
|
369,425
|
|
378,576
|
|
Total
liabilities
|
|
501,255
|
|
512,348
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.001 par value, 50,000,000 shares authorized, and
22,669,038 and
22,620,417 shares issued and outstanding at
March 31, 2022 and September 30, 2021,
respectively
|
|
23
|
|
23
|
|
Additional paid-in
capital
|
|
57,661
|
|
57,289
|
|
Retained
earnings
|
|
96,161
|
|
85,419
|
|
Total stockholders' equity
|
|
153,845
|
|
142,731
|
|
Total liabilities and
stockholders' equity
|
|
$
655,100
|
|
655,079
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC. Consolidated Statements of
Cash Flows (Unaudited) (Dollars in
thousands)
|
|
|
|
Six months ended
March 31,
|
|
|
|
2022
|
|
2021
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
15,272
|
|
8,336
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
14,020
|
|
15,057
|
|
Impairment of
long-lived assets and store closing costs
|
|
95
|
|
105
|
|
Loss on disposal of
property and equipment
|
|
85
|
|
—
|
|
Share-based
compensation
|
|
590
|
|
487
|
|
Deferred income tax
expense
|
|
107
|
|
1,089
|
|
Non-cash interest
expense
|
|
12
|
|
11
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Decrease (increase)
in:
|
|
|
|
|
|
Accounts receivable,
net
|
|
1,062
|
|
(477)
|
|
Merchandise
inventory
|
|
(6,104)
|
|
1,719
|
|
Prepaid expenses and
other assets
|
|
(623)
|
|
(922)
|
|
Income tax
receivable
|
|
—
|
|
3,004
|
|
Operating lease
assets
|
|
15,787
|
|
15,402
|
|
(Decrease) increase
in:
|
|
|
|
|
|
Operating lease
liabilities
|
|
(12,748)
|
|
(15,861)
|
|
Accounts
payable
|
|
1,712
|
|
(7,142)
|
|
Accrued
expenses
|
|
(1,686)
|
|
(3,503)
|
|
Net cash provided by
operating activities
|
|
27,581
|
|
17,305
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(10,855)
|
|
(8,673)
|
|
Acquisition of other
intangibles
|
|
(1,586)
|
|
(926)
|
|
Proceeds from sale of
property and equipment
|
|
16
|
|
—
|
|
Proceeds from property
insurance settlements
|
|
130
|
|
58
|
|
Net cash used in
investing activities
|
|
(12,295)
|
|
(9,541)
|
|
Financing
activities:
|
|
|
|
|
|
Borrowings under
revolving facility
|
|
4,000
|
|
—
|
|
Repayments under
revolving facility
|
|
(4,000)
|
|
—
|
|
Borrowings under term
loan facility
|
|
—
|
|
35,000
|
|
Repayments under term
loan facility
|
|
(4,000)
|
|
(438)
|
|
Finance lease
obligation payments
|
|
(1,327)
|
|
(1,369)
|
|
Dividends to
shareholders
|
|
(4,530)
|
|
(48,288)
|
|
Loan fees
paid
|
|
—
|
|
(52)
|
|
Payments on
withholding tax for restricted stock unit vesting
|
|
(218)
|
|
(174)
|
|
Net cash used in
financing activities
|
|
(10,075)
|
|
(15,321)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
5,211
|
|
(7,557)
|
|
Cash and cash
equivalents, beginning of period
|
|
23,678
|
|
28,534
|
|
Cash and cash
equivalents, end of period
|
|
$
|
28,889
|
|
20,977
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
290
|
|
165
|
|
Cash paid for interest
on finance lease obligations, net of capitalized interest
of
$146 and $83, respectively
|
|
865
|
|
910
|
|
Income taxes
paid
|
|
3,721
|
|
4,777
|
|
Supplemental
disclosures of non-cash investing and financing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment not yet paid
|
|
$
|
2,103
|
|
4,435
|
|
Acquisition of other
intangibles not yet paid
|
|
|
354
|
|
233
|
|
Property acquired
through operating lease obligations
|
|
|
6,571
|
|
7,287
|
|
Property acquired
through finance lease obligations
|
|
|
4,129
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC. Non-GAAP Financial
Measures (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 six months ended March 31,
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 six months
ended March 31, 2021 included
$0.4 million in lease exit costs
associated with one store that closed in fiscal year 2019.
The following table reconciles net income to EBITDA and Adjusted
EBITDA, dollars in thousands:
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Three months
ended
March 31,
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Six months
ended
March 31,
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2022
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2021
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2022
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2021
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Net income
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$
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6,357
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4,704
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15,272
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8,336
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Interest expense,
net
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545
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|
603
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1,089
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1,113
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Provision for income
taxes
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1,962
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1,399
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4,527
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2,459
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Depreciation and
amortization
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6,907
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7,420
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14,020
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15,057
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EBITDA
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15,771
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14,126
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34,908
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26,965
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Impairment of long-lived assets and store
closing costs
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—
296
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—
239
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95
590
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405
487
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Share-based compensation
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Adjusted EBITDA
(1)
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$
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16,067
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14,365
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35,593
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27,857
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(1)
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Adjusted EBITDA for
the three and six months ended March 31, 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 increased 11.6% to $15.8
million for the three months ended March 31, 2022 compared to $14.1 million for the three months ended
March 31, 2021. EBITDA increased
29.5% to $34.9 million for the six
months ended March 31, 2022 compared
to $27.0 million for the six months
ended March 31, 2021. EBITDA as a
percentage of net sales was 5.8% and 5.4% for the three months
ended March 31, 2022 and 2021,
respectively. EBITDA as a percentage of net sales was 6.4% and 5.1%
for the six months ended March 31,
2022 and 2021, respectively.
Adjusted EBITDA increased 11.8% to $16.1
million for the three months ended March 31, 2022 compared to $14.4 million for the three months ended
March 31, 2021. Adjusted EBITDA
increased 27.8% to $35.6 million for
the six months ended March 31, 2022
compared to $27.9 million for the six
months ended March 31, 2021. Adjusted
EBITDA as a percentage of net sales was 5.9% and 5.5% for the three
months ended March 31, 2022 and 2021,
respectively. Adjusted EBITDA as a percentage of net sales was 6.5%
and 5.3% for the six months ended March 31,
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 six months ended March 31,
2021, did not exclude share-based compensation. However,
Adjusted EBITDA for the three and six months ended March 31, 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 measure 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.