Natural Grocers by Vitamin Cottage, Inc.

Good day, ladies and gentlemen. Welcome to the Natural Grocers' first quarter fiscal year 2022 earnings conference call. At this time, all participants are in only mode. Later, we will conduct the question and answer session, and instructions will be given at that time. As a reminder, today's call is being recorded. I would now like to turn the conference over to Ms. Jessica Thiessen, Assistant Treasurer for Natural Grocers. Ms. Thiessen, you may begin.

Good afternoon, everyone, and thank you for joining us for the Natural Grocers by Vitamin Cottage first quarter fiscal year 2022 earnings conference call. On the call with me today are Kemper Isley, co-president, and Todd Dissinger, chief financial officer. As a reminder, certain information provided during this conference call are forward-looking statements based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements due to a variety of factors, including the risks and uncertainties detailed in the company's most recently filed Forms 10Q and 10K. The company undertakes no obligation to update forward-looking statements. Today's press release is available on the company's website, and a recording of this call will be available on the website at investors.naturalgrocers.com. Now I will turn the call over to Kemper.

Thank you, Jessica, and good afternoon, everyone. Thank you for joining us today. We are pleased with our strong start to fiscal 2022. We continue to see positive operating trends as we effectively navigate a dynamic environment. Our first quarter results included net sales of $277.3 million and diluted earnings per share of 39 cents. increases of 4.6% and 143.8% respectively. We were able to leverage strong sales increases into higher profitability, including a 230 basis point improvement in operating margin. Momentum remained strong across our business. Daily average comparable store sales rose 3.8%, including increases in both transaction count and basket size. On a two-year stacked basis, daily average comparable store sales increased 16.5% in the first quarter. Our unwavering commitment to our founding principles remains a key element in our success. We provide a differentiated offering of natural and organic products at always affordable prices, coupled with free science-based nutrition education. which continues to resonate with consumers who are prioritizing health and wellness more than ever. Our NPower loyalty program continued to grow, evidencing our deep engagement with our customers. We ended the quarter with almost 1.6 million loyalty members, a year-over-year increase of 20%. The net sales penetration for NPower reached 73%, up from 72% in the fourth quarter and 69% a year ago. The first quarter sales were positively impacted by our non-GMO event in October. Strong trends around the Thanksgiving holiday and our annual holiday deals promotion in December. We saw strong consumer demand for our supplement offering continue in the first quarter. For the third consecutive quarter, the supplements category posted sales comps that exceeded the overall company average. Customers continued to be drawn to our natural grocers' branded products, which accounted for 7.5% of total sales in the first quarter, up from 7.1% in the fourth quarter. During the quarter, we launched 13 new branded products, including frozen side dishes and additional dietary supplements. During the quarter, we relocated our store in Greeley, Colorado, and are very pleased with our Greeley customers' response to the move. We remain on track to open four to six new stores and relocate or remodel three to four stores in fiscal 2022. We continue to manage through supply chain challenges, During the first quarter, our out-of-stocks were relatively consistent with recent quarters. However, we saw a slight increase in our out-of-stocks that began in late December and continued through January. We are working closely with our vendors to address these challenges. Earlier this week, we released our inaugural environmental, social, and governance report. Natural Grocers was founded by my parents in 1955. who were inspired by core values that many would recognize today as sustainability principles. The company was built on and remains committed to our five founding principles, quality natural and organic products, always affordable pricing, nutrition education, crew and community. These principles continue to guide our business practices, focusing on the health and well-being of our communities and the planet. Our crew's dedication to these principles ensure our store's operations and supply chain reflect these values. Since its founding, Natural Grocers has embraced practices intended to make our food system more just, sustainable, and equitable. In closing, I want to thank every member of our Good4U crew for their continued hard work and commitment to helping us deliver the highest quality natural and organic products at affordable prices. and excellent customer service. With that, let me turn the call over to Todd to discuss our financial results and guidance.