Raises Fiscal 2024 Outlook
LAKEWOOD, Colo., May 9, 2024
/PRNewswire/ -- Natural Grocers by Vitamin Cottage, Inc.
(NYSE: NGVC) today announced results for its second quarter of
fiscal 2024 ended March 31, 2024.
Highlights for Second Quarter Fiscal 2024 Compared to Second
Quarter Fiscal 2023
- Net sales increased 8.8% to $308.1
million;
- Daily average comparable store sales increased 7.5%, and
increased 10.2% on a two-year basis;
- Net income was $8.0 million, with
diluted earnings per share of $0.35;
- Adjusted EBITDA was $19.7
million; and
- Opened one new store.
"Second quarter results were outstanding as we delivered record
quarterly sales, margin expansion, and significant earnings growth.
Daily average comparable store sales accelerated to 7.5%, driven by
a 3.9% increase in transaction size, including item count growth,
and a 3.5% increase in transaction count," said Kemper Isely, Co-President. "Natural Grocers is
very differentiated in the market and highly relevant to consumers.
Our sales momentum reflects our effective engagement with our loyal
and resilient customer base that prioritizes products with health
and sustainability attributes. We believe that our high product
quality standards, emphasis on value and Always
AffordableSM prices, customer service, and convenient
shopping experience continue to resonate with consumers to make us
a leading destination for natural and organic products in our
communities."
Mr. Isely continued, "Strong sales growth, combined with
effective expense management, generated operating leverage and
drove a 34.6% year-over-year increase in diluted earnings per share
to $0.35. Based upon the strength of
our results through the second quarter, we are raising our fiscal
2024 outlook for daily average comparable store sales growth and
diluted earnings per share."
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 2024 Compared to
Second Quarter Fiscal 2023
During the second quarter of fiscal 2024, net sales increased
$24.8 million, or 8.8%, to
$308.1 million, compared to the
second quarter of fiscal 2023, due to a $21.1 million increase in comparable store sales
and a $5.2 million increase in new
store sales, partially offset by a $1.5
million decrease in net sales related to closed stores.
Daily average comparable store sales increased 7.5% in the second
quarter of fiscal 2024, comprised of a 3.9% increase in daily
average transaction size and a 3.5% increase in daily average
transaction count. The increase in net sales was driven by
increases in transaction counts, items per transaction, retail
prices, and new store sales. Marketing initiatives, including
{N}power® rewards program offers and market-specific campaigns,
enhanced customer engagement, which contributed to sales
growth.
Gross profit during the second quarter of fiscal 2024 increased
$7.9 million, or 9.6%, to
$90.4 million, compared to
$82.5 million in the second quarter
of fiscal 2023. Gross profit reflects earnings after product and
store occupancy costs. Gross margin increased 20 basis points to
29.3% during the second quarter of fiscal 2024, compared to 29.1%
in the second quarter of fiscal 2023. The increase in gross margin
was driven by store occupancy cost leverage, partially offset by
lower product margin attributable to product mix.
Store expenses during the second quarter of fiscal 2024
increased 6.2% to $69.2 million,
primarily driven by higher compensation expenses. Store expenses as
a percentage of net sales were 22.5% during the second quarter of
fiscal 2024, down from 23.0% in the second quarter of fiscal 2023.
The decrease in store expenses as a percentage of net sales
reflects expense leverage.
Administrative expenses during the second quarter of fiscal 2024
increased 10.7% to $9.5 million,
driven by higher compensation expenses. Administrative expenses as
a percentage of net sales were 3.1% in the second quarter of fiscal
2024, up from 3.0% in the second quarter of fiscal 2023.
Operating income for the second quarter of fiscal 2024 was
$11.3 million, compared to
$8.4 million in the second quarter of
fiscal 2023. Operating margin during the second quarter of fiscal
2024 was 3.7%, compared to 3.0% in the second quarter of fiscal
2023.
Net income for the second quarter of fiscal 2024 was
$8.0 million, or $0.35 diluted earnings per share, compared to net
income of $5.9 million, or
$0.26 diluted earnings per share, for
the second quarter of fiscal 2023.
Adjusted EBITDA for the second quarter of fiscal 2024 was
$19.7 million, compared to
$16.8 million in the second quarter
of fiscal 2023.
Operating Results — First Six Months Fiscal 2024 Compared to
First Six Months Fiscal 2023
During the first six months of fiscal 2024, net sales increased
$46.1 million, or 8.2%, to
$609.8 million, compared to the first
six months of fiscal 2023, due to a $38.4
million increase in comparable store sales and a
$10.6 million increase in new store
sales, partially offset by a $2.9
million decrease in sales related to closed stores. Daily
average comparable store sales increased 6.9% in the first six
months of fiscal 2024, and was comprised of a 3.4% increase in
daily average transaction count and a 3.3% increase in daily
average transaction size. The increase in net sales was driven by
increases in transaction counts, retail prices, new store sales,
and items per transaction. Marketing initiatives, including
{N}power® rewards program offers and market-specific campaigns,
enhanced customer engagement, which contributed to sales
growth.
Gross profit during the first six months of fiscal 2024
increased $17.9 million, or 11.1%, to
$179.1 million. Gross profit reflects
earnings after product and store occupancy costs. Gross margin
increased to 29.4% during the first six months of fiscal 2024,
compared to 28.6% in the first six months of fiscal 2023. The
increase in gross margin was driven by higher product margin
attributed to effective pricing and promotions, and store occupancy
cost leverage.
Store expenses during the first six months of fiscal 2024
increased 6.5% to $137.2 million,
primarily driven by higher compensation expenses. Store expenses as
a percentage of net sales were 22.5% during the first six months of
fiscal 2024, down from 22.8% in the first six months of fiscal
2023. The decrease in store expenses as a percentage of net sales
reflects expense leverage.
Administrative expenses during the first six months of fiscal
2024 increased 12.3% to $18.9
million, driven by higher compensation expenses.
Administrative expenses as a percentage of net sales were 3.1%
during the first six months of fiscal 2024, up from 3.0% in the
first six months of fiscal 2023.
Operating income for the first six months of fiscal 2024 was
$22.1 million, compared to
$14.8 million in the first six months
of fiscal 2023. Operating margin during the first six months of
fiscal 2024 was 3.6%, compared to 2.6% in the first six months of
fiscal 2023.
Net income for the first six months of fiscal 2024 was
$15.7 million, or $0.68 diluted earnings per share, compared to net
income of $10.3 million, or
$0.45 diluted earnings per share, for
the first six months of fiscal 2023.
Adjusted EBITDA for the first six months of fiscal 2024 was
$38.5 million, compared to
$30.6 million in the first six months
of fiscal 2023.
Balance Sheet and Cash Flow
As of March 31, 2024, the Company
had $11.0 million in cash and cash
equivalents, and $11.4 million in
outstanding borrowings on its $75.0
million revolving credit facility.
During the first six months of fiscal 2024, the Company
generated $36.8 million in cash from
operations and invested $22.5 million
in net capital expenditures, primarily for new and relocated
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 June 19,
2024 to stockholders of record at the close of business on
June 3, 2024.
Growth and Development
During the second quarter of fiscal 2024, the Company opened one
store, ending the quarter with a total of 168 stores in 21
states.
Fiscal 2024 Outlook
The Company is raising its fiscal 2024 outlook for daily average
comparable store sales growth and diluted earnings per share. The
Company is otherwise confirming its previously announced outlook
for fiscal 2024. The Company now expects:
|
Fiscal
2024 Outlook
|
Number of new
stores
|
4 to 6
|
Number of
relocations/remodels
|
4 to 6
|
Daily average
comparable store sales growth
|
4.0% to 6.0%
|
Diluted earnings per
share
|
$1.08 to
$1.18
|
|
|
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 Q2 FY 2024 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 168 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, 2023 (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
March 31,
|
|
Six months ended
March 31,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net sales
|
|
$
|
308,092
|
|
283,245
|
|
609,842
|
|
563,702
|
|
Cost of goods sold and
occupancy costs
|
|
217,735
|
|
200,768
|
|
430,725
|
|
402,506
|
|
Gross
profit
|
|
90,357
|
|
82,477
|
|
179,117
|
|
161,196
|
|
Store
expenses
|
|
69,204
|
|
65,192
|
|
137,216
|
|
128,788
|
|
Administrative
expenses
|
|
9,522
|
|
8,605
|
|
18,929
|
|
16,858
|
|
Pre-opening
expenses
|
|
370
|
|
249
|
|
908
|
|
702
|
|
Operating
income
|
|
11,261
|
|
8,431
|
|
22,064
|
|
14,848
|
|
Interest expense,
net
|
|
(1,177)
|
|
(834)
|
|
(2,071)
|
|
(1,630)
|
|
Income before income
taxes
|
|
10,084
|
|
7,597
|
|
19,993
|
|
13,218
|
|
Provision for income
taxes
|
|
(2,123)
|
|
(1,713)
|
|
(4,277)
|
|
(2,927)
|
|
Net income
|
|
$
|
7,961
|
|
5,884
|
|
15,716
|
|
10,291
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share of
common stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
0.26
|
|
0.69
|
|
0.45
|
|
Diluted
|
|
$
|
0.35
|
|
0.26
|
|
0.68
|
|
0.45
|
|
Weighted average number
of shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
22,759,131
|
|
22,725,462
|
|
22,755,307
|
|
22,716,880
|
|
Diluted
|
|
23,061,119
|
|
22,824,673
|
|
23,015,842
|
|
22,809,189
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated Balance
Sheets
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
March
31,
2024
|
|
September 30,
2023
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
10,970
|
|
18,342
|
|
Accounts receivable,
net
|
|
8,741
|
|
10,797
|
|
Merchandise
inventory
|
|
117,352
|
|
119,260
|
|
Prepaid expenses and
other current assets
|
|
3,806
|
|
4,151
|
|
Total current
assets
|
|
140,869
|
|
152,550
|
|
Property and equipment,
net
|
|
178,339
|
|
169,060
|
|
Other
assets:
|
|
|
|
|
|
Operating lease
assets, net
|
|
280,165
|
|
287,941
|
|
Finance lease assets,
net
|
|
42,908
|
|
45,110
|
|
Deposits and other
assets
|
|
288
|
|
395
|
|
Goodwill and other
intangible assets, net
|
|
14,002
|
|
14,129
|
|
Total other
assets
|
|
337,363
|
|
347,575
|
|
Total
assets
|
|
$
|
656,571
|
|
669,185
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
84,176
|
|
80,675
|
|
Accrued
expenses
|
|
32,312
|
|
33,064
|
|
Term loan facility,
current portion
|
|
3,688
|
|
1,750
|
|
Operating lease
obligations, current portion
|
|
35,859
|
|
34,850
|
|
Finance lease
obligations, current portion
|
|
3,860
|
|
3,690
|
|
Total current
liabilities
|
|
159,895
|
|
154,029
|
|
Long-term
liabilities:
|
|
|
|
|
|
Term loan facility,
net of current portion
|
|
—
|
|
5,938
|
|
Revolving
facility
|
|
11,400
|
|
—
|
|
Operating lease
obligations, net of current portion
|
|
267,293
|
|
276,808
|
|
Finance lease
obligations, net of current portion
|
|
45,220
|
|
47,142
|
|
Deferred income tax
liabilities, net
|
|
12,789
|
|
14,427
|
|
Total long-term
liabilities
|
|
336,702
|
|
344,315
|
|
Total
liabilities
|
|
496,597
|
|
498,344
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.001
par value, 50,000,000 shares authorized, 22,771,969 and
22,745,412 shares issued at March 31, 2024 and September 30,
2023, respectively,
and
22,771,969 and 22,738,915 shares outstanding at March 31, 2024
and
September
30, 2023, respectively
|
|
23
|
|
23
|
|
Additional paid-in
capital
|
|
59,706
|
|
59,013
|
|
Retained
earnings
|
|
100,245
|
|
111,871
|
|
Common stock in
treasury at cost, 6,497 shares at September 30, 2023
|
|
—
|
|
(66)
|
|
Total stockholders'
equity
|
|
159,974
|
|
170,841
|
|
Total liabilities and
stockholders' equity
|
|
$
|
656,571
|
|
669,185
|
|
NATURAL GROCERS BY
VITAMIN COTTAGE, INC.
Consolidated
Statements of Cash Flows
(Unaudited)
(Dollars in
thousands)
|
|
|
|
|
|
Six months ended
March 31,
|
|
|
|
2024
|
|
2023
|
|
Operating
activities:
|
|
|
|
|
|
Net income
|
|
$
|
15,716
|
|
10,291
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
15,153
|
|
14,216
|
|
(Gain) loss on
impairment of long-lived assets and store closures
|
|
(3)
|
|
871
|
|
Loss on disposal of
property and equipment
|
|
30
|
|
3
|
|
Share-based
compensation
|
|
838
|
|
713
|
|
Deferred income tax
(benefit) expense
|
|
(1,639)
|
|
149
|
|
Non-cash interest
expense
|
|
9
|
|
9
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Decrease (increase)
in:
|
|
|
|
|
|
Accounts receivable,
net
|
|
1,358
|
|
3,358
|
|
Merchandise
inventory
|
|
1,908
|
|
(2,297)
|
|
Prepaid expenses and
other assets
|
|
423
|
|
373
|
|
Income tax
receivable
|
|
30
|
|
166
|
|
Operating lease
assets
|
|
16,661
|
|
16,406
|
|
(Decrease) increase
in:
|
|
|
|
|
|
Operating lease
liabilities
|
|
(16,768)
|
|
(16,940)
|
|
Accounts
payable
|
|
3,883
|
|
9,270
|
|
Accrued
expenses
|
|
(752)
|
|
(1,731)
|
|
Net cash provided by
operating activities
|
|
36,847
|
|
34,857
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(22,183)
|
|
(16,978)
|
|
Acquisition of other
intangibles
|
|
(371)
|
|
(859)
|
|
Proceeds from sale of
property and equipment
|
|
3
|
|
72
|
|
Proceeds from property
insurance settlements
|
|
41
|
|
—
|
|
Net cash used in
investing activities
|
|
(22,510)
|
|
(17,765)
|
|
Financing
activities:
|
|
|
|
|
|
Borrowings under
revolving facility
|
|
293,800
|
|
246,500
|
|
Repayments under
revolving facility
|
|
(282,400)
|
|
(246,500)
|
|
Repayments under term
loan facility
|
|
(4,000)
|
|
(4,000)
|
|
Finance lease
obligation payments
|
|
(1,706)
|
|
(1,357)
|
|
Dividends to
shareholders
|
|
(27,306)
|
|
(4,543)
|
|
Payments of deferred
financing costs
|
|
(18)
|
|
—
|
|
Repurchase of common
stock
|
|
—
|
|
(86)
|
|
Payments on
withholding tax for restricted stock unit vesting
|
|
(79)
|
|
(180)
|
|
Net cash used in
financing activities
|
|
(21,709)
|
|
(10,166)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(7,372)
|
|
6,926
|
|
Cash and cash
equivalents, beginning of period
|
|
18,342
|
|
12,039
|
|
Cash and cash
equivalents, end of period
|
|
$
|
10,970
|
|
18,965
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
989
|
|
639
|
|
Cash paid for interest
on finance lease obligations, net of capitalized interest of
$199
and $122,
respectively
|
|
961
|
|
1,005
|
|
Income taxes
paid
|
|
6,466
|
|
2,625
|
|
Supplemental
disclosures of non-cash investing and financing
activities:
|
|
|
|
|
|
Acquisition of
property and equipment not yet paid
|
|
$
|
5,353
|
|
2,033
|
|
Acquisition of other
intangibles not yet paid
|
|
|
283
|
|
103
|
|
Property acquired
through operating lease obligations
|
|
|
9,432
|
|
756
|
|
Property acquired
through finance lease obligations
|
|
|
(45)
|
|
1,652
|
|
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
March 31,
|
|
Six months ended
March 31,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income
|
|
$
|
7,961
|
|
5,884
|
|
15,716
|
|
10,291
|
|
Interest expense,
net
|
|
1,177
|
|
834
|
|
2,071
|
|
1,630
|
|
Provision for income
taxes
|
|
2,123
|
|
1,713
|
|
4,277
|
|
2,927
|
|
Depreciation and
amortization
|
|
7,702
|
|
7,154
|
|
15,153
|
|
14,216
|
|
EBITDA
|
|
|
18,963
|
|
15,585
|
|
37,217
|
|
29,064
|
|
Impairment of
long-lived assets and store closing costs
|
|
|
335
|
|
871
|
|
424
|
|
871
|
|
Share-based
compensation
|
|
432
|
|
356
|
|
838
|
|
713
|
|
Adjusted
EBITDA
|
|
$
|
19,730
|
|
16,812
|
|
38,479
|
|
30,648
|
|
EBITDA increased 21.7% to $19.0
million for the three months ended March 31, 2024 compared to $15.6 million for the three months ended
March 31, 2023. EBITDA increased
28.1% to $37.2 million for the six
months ended March 31, 2024 compared
to $29.1 million for the six months
ended March 31, 2023. EBITDA as a
percentage of net sales was 6.2% and 5.5% for the three months
ended March 31, 2024 and 2023,
respectively. EBITDA as a percentage of net sales was 6.1% and 5.2%
for the six months ended March 31,
2024 and 2023, respectively.
Adjusted EBITDA increased 17.4% to $19.7
million for the three months ended March 31, 2024 compared to $16.8 million for the three months ended
March 31, 2023. Adjusted EBITDA
increased 25.6% to $38.5 million for
the six months ended March 31, 2024
compared to $30.6 million for the six
months ended March 31, 2023. Adjusted
EBITDA as a percentage of net sales was 6.4% and 5.9% for the three
months ended March 31, 2024 and 2023,
respectively. Adjusted EBITDA as a percentage of net sales was 6.3%
and 5.4% for the six months ended March 31,
2024 and 2023, 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.