Natural Grocers by Vitamin Cottage, Inc.

Good day, ladies and gentlemen. Welcome to the National Grocers fourth quarter and fiscal year 2023 earnings conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, today's call is being recorded. I'd like now to turn the conference over to Miss Jessica Thiessen, Vice President Treasurer for Natural Grocers. Miss Thiessen, you may begin.

Good afternoon and thank you for joining us for the Natural Grocers by Vitamin Cottage fourth quarter and fiscal year 2023 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 for our fourth quarter call. Today, I would like to highlight our financial results, outline several key drivers and accomplishments, and review our priorities and initiatives. Then Todd will discuss the fourth quarter results in greater detail and introduce our fiscal year 2024 guidance. Our fiscal year 2023 daily average comparable store sales growth of 3.6% marked our 20th consecutive year of positive comparable store sales. We are proud of this extraordinary accomplishment. For the fiscal year, we achieved record diluted earnings per share of $1.02 and an 8.5% increase compared to last year. Our fourth quarter sales trends were particularly strong. Daily average comparable store sales increased 6.9%, including a 3.6% increase in daily average transaction count. Moreover, the strength was broad-based across our product categories We attribute the strong fourth quarter and fiscal year sales to our differentiated business model and our responsiveness to the industry dynamics. We continue to be positively impacted by consumers prioritizing health and wellness. Our customers appreciate our carefully vetted natural and organic product offering. We believe that our value proposition of high quality products at always affordable prices resonates with consumers in the current economic environment during fiscal 2023 our targeted marketing and promotions effectively drove customer engagement our percentage of sales on promotion has been relatively stable over recent quarters further our emphasis on the in-store shopping experience has been an important contributor to driving our strong traffic trends I would like to recognize our operations, purchasing, and marketing teams for how they have nimbly transitioned from pandemic conditions to focus on core execution and navigating the current macro environment. Our company's commitment to operational excellence and continuous improvement were instrumental in driving our strong fourth quarter and fiscal year performance. We developed and executed market-specific campaigns that accelerated sales growth in underperforming stores. Effective pricing and promotional strategies contributed to the fiscal year gross margin improvement of 70 basis points. Higher labor efficiency partially offset increased wage rates and drove store productivity. we prioritize driving engagement with our customers. During fiscal year 2023, we continued to enhance the personalization, frequency, and range of our NPower Rewards Program offers. In particular, we featured NPower promotions with a focus on local store marketing. In August, we launched a National Grocers mobile app, which provides NPower members with enhanced access to exclusive offers, digital coupons, recipes, and articles. We believe these initiatives collectively drove the 17% increase in NPower membership and were a major contributor to our broad-based sales growth. Our National Grocers brand products remain a key point of differentiation due to their emphasis on quality and price. In the fourth quarter, private label brands represented 7.8% of total sales, up from 7.6% in the fourth quarter of last year. During fiscal year 2023, we expanded our line of National Grocers brand products with 59 new offerings, including a distinctive offering of organic eggs from Regenerative Farms, launched in the fourth quarter. We believe that we are the first national grocery chain to offer private label, regenerative certified, organic pasture-raised, and organic free-range eggs. Our company has a long-standing commitment to investing in our crew as one of our founding principles. Earlier this month, we implemented another company-wide wage rate increase. Our all-in average hourly wage rate for full-time store crew now exceeds $21 per hour. To partially offset higher labor rates, we continue to implement productivity initiatives. Recent projects include improvements to the receiving process, enhancements to automated replenishment, and point-of-sale system updates designed to create labor efficiencies. Improve inventory accuracy and provide more pricing flexibility. These initiatives have enabled us to streamline and automate certain in-store tasks while maintaining a high level of customer service. New store development continues to be a priority for our company. During the fourth quarter, we opened a store in Kennywick, Washington, relocated our store in Beaverton, Oregon, and remodeled our store in Norman, Oklahoma. In fiscal year 2023, we opened a total of three stores, relocated two stores, and remodeled one store. We are pleased with the performance of these stores. Our new store development was constrained in fiscal year 2021 through 2023 due to delays in permitting and construction and the availability of materials. Over the next several years, we are targeting a return to opening between six and eight new stores per year, subject to improving construction and supply chain conditions. I am pleased to announce that our Board has declared a special cash dividend of $1 per common share, in addition to our quarterly cash dividend of $0.10 per common share, to be paid in December. The special dividend reflects our strong operating trends, financial position, confidence in our business outlook, and commitment to returning value to our stockholders. including the special and quarterly dividends announced today, we will have cumulatively returned $4.46 in cash per share to stockholders since initiating our dividend program four years ago. Finally, I would like to thank every member of our Good4U crew for their commitment to operational execution and exceptional customer service, which were instrumental in driving our strong performance in the fourth quarter, that culminated in a record-setting year. With that, I will turn the call over to Todd to discuss our financial results and guidance.