Natural Grocers by Vitamin Cottage, Inc.

Ladies and gentlemen, welcome to the Natural Grocers fourth quarter and full fiscal year 2022 earnings conference call. At this time, all participants are in a listen-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'd now like to turn the conference over to Ms. Jessica Thiessen, Vice President, Treasurer for Natural Grocers. As soon as we may begin.

Good afternoon, and thank you for joining us for the Natural Grocers by Vitamin Cottage fourth quarter and 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. We are ecstatic to report that we had record earnings in fiscal year 2022, achieving our guidance for daily average comparable store sales growth and diluted earnings per share. We had net sales of $1.1 billion and diluted earnings per share of $0.94. Fiscal year 2022 marked our 19th consecutive year of positive daily average comparable store sales growth. We take great pride in all of the company's accomplishments this year. We have experienced sustained growth over the past several years since fiscal 2019 or pre-pandemic levels Our daily average comparable store sales have increased 15.7%, the basket is up over 20%, and diluted earnings per share have grown 124%, demonstrating the relevance and enduring strength of our business model. Three years ago, we instituted a cash dividend that has cumulatively returned $2.96 per common share of capital to our stockholders. The dividend reflects our strong operating performance and financial position, confidence in our business model, and commitment to returning value to our stockholders. Fourth quarter results were in line with our expectations as we cycled strong performance in the fourth quarter last year. Todd will cover the results in more detail after I highlight a few key company initiatives. Our NPower loyalty program continues to be an effective tool for optimizing promotional activity and driving customer engagement. We ended the quarter with 1.8 million loyalty members, a year-over-year increase of 18%. The fourth quarter net sales penetration for NPower was 76%, up from 72% a year ago, evidencing our customers' appreciation of the benefits provided by this program. Our natural grocers' brand products remain a key point of differentiation and a sales driver as today's consumers are increasingly focused on prioritizing value. In the fourth quarter, private label brands represented 7.6% of total sales, up from 7.1% in the fourth quarter of last year. During the quarter, we launched 12 new branded products, including four varieties of wild-caught seafood that are pre-seasoned and ready to cook, and they are quite good tasting. In fiscal year 2022, we grew our private brand offerings by 41 SKUs. For the year, the sales growth of our natural grocers brand products exceeded the company's growth rate. We attribute this higher growth to our customers' awareness of the strong value proposition of our premium quality offerings at compelling prices. Turning now to new store development, during the fourth quarter, we opened our first South Dakota store in Sioux Falls, opened a new store in Brighton, Colorado, and relocated our store in Cheyenne, Wyoming. In fiscal year 2022, we opened a total of three stores and relocated two stores. We are very pleased with the performance of these new stores and relocations. Our new store development was constrained in fiscal year 2021 and 2022 by delays in construction, permitting, and the availability of materials and equipment. Over the next several years, we expect to return to opening between six and eight new stores per year, subject to improving construction and supply chain conditions. Natural Grocers has a legacy of being a values-driven company. Our commitment to building a healthy, sustainable future for our customers, our Good4U crew, and our communities is long-standing and authentic. We work hard to ensure our product offering, stores, operations, corporate practices, and supply chain reflect these values. In fiscal year 2022, the combination of company donations and customer fundraisers resulted in more than $1 million in monetary donations and more than $4 million of in-kind food and product donations to local food banks. We are the only national grocery chain that offers the resources of a full-time nutritional health coach in each store. whose primary responsibility is providing free, science-based nutrition education to our customers and the surrounding community. In fiscal year 2022, our investment to provide free nutrition education was more than $4 million. Earlier this month, we implemented another wage rate increase of $1 per hour for hourly store crew. This increase represents our third $1 per hour increase since the beginning of the pandemic. Our company-wide average hourly wage rate for full-time store crew now exceeds $20 per hour, including $1 per hour in vitamin bucks. This compares to the November 2019 average wage rate of approximately $15.50 per hour and reflects our long-standing commitment to investing in our crews. In closing, I want to recognize every member of our Good4U crew for their continued hard work and commitment to our founding principles, including delivering the highest quality products at always affordable prices to the communities we serve. With that, let me turn the call over to Todd to discuss our financial results and guidance.