Natural Grocers by Vitamin Cottage, Inc.

Good day, ladies and gentlemen. Welcome to the Natural Grocers Fourth Quarter and Fiscal Year 2024 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 would now like to turn the conference over to Ms. Jessica Thiessen, Vice President, Treasurer for Natural Grocers. Ms. Thiessen, you may begin.

Good afternoon, and thank you for joining us for the Natural Grocers by Vitamin Cottage fourth quarter and fiscal year 2024 earnings conference call. On the call with me today are Kemper Isley, co-president, Todd Dissinger, chief financial officer, and Richard Halle, our incoming chief financial officer. As a reminder, certain information provided during this conference call contains 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 will highlight our financial results, including key drivers of our performance, and provide an update on our priorities. Then Todd will discuss the fourth quarter results in greater detail and introduce our fiscal year 2025 guidance. We are pleased with our strong performance in the fourth quarter, particularly the balanced nature of our growth. We had 7.1% daily average comparable store sales growth and 14% on a two-year basis. Sales growth included increases in transaction counts and items per transaction. modest price inflation and sales contribution from the new stores. Additionally, gross margin increased 100 basis points, driven by both store occupancy cost leverage and higher product margin. The sales and margin improvements combined with expense management and leverage resulted in a 53% increase in net income. The full fiscal year performance was also balanced, including a daily average comparable store sales increase of 7% and gross margin improvement of 70 basis points. Furthermore, We delivered operating margin expansion of 100 basis points and diluted earnings per share growth of 44%. Our positive comp in fiscal 2024 represented our 21st consecutive year of positive comparable store sales growth. Our outstanding fourth quarter and fiscal year results underscore our customers' appreciation for our commitment to the exceptional quality, value and convenience provided by our innovative business model. Additionally, we continue to benefit from consumers' increasing prioritization of products that support health and sustainability. We provide a differentiated merchandising strategy that delivers affordable, high-quality, natural and organic grocery products and dietary supplements. In the fourth quarter and for the fiscal year, the departments with the highest sales growth were meat, dairy, and produce. We believe our high product standards in these departments resonate with consumers now more than ever. Our meat product standards prioritize humanely raised and sustainably sourced offerings. For example, our chicken product standard has always prohibited the use of antibiotics, hormones, and other growth promotants. Our dairy department standards require pasture-raised, non-confinement dairy products. And our minimum egg standard is free-range. Our produce offering is 100% certified organic and was organic even before there was an official USDA organic designation. Our commitment to offering high quality products at always affordable prices creates a compelling value proposition that is distinctive within the market. Our marketing initiatives consistently emphasize these key characteristics to drive customer engagement. We believe that communicating and reinforcing our distinct position in the marketplace has been instrumental in generating our strong sales performance over the past several quarters. As we reflect upon our performance over a longer horizon, we have achieved sustained growth by consistently executing our founding principles and focusing on customer engagement and operational initiatives. Additionally, we have benefited from favorable category and consumer trends. Over the previous five years, we have grown net sales by 37% and more than tripled diluted earnings per share. Furthermore, during this period, we returned $108 million in capital to our stockholders through $4.76 of cumulative dividends per common share. We take great pride in our sustained and balanced growth. Consistent with our focus on returning capital to our stockholders, today we announced that our board of directors has approved increasing our quarterly cash dividend to 12 cents per common share, representing a 20% increase. Turning now to an update on key priorities for our business. We believe that our initiatives drove growth in fiscal 2024 and will continue to provide growth opportunities in the future. We continue to leverage our NPower Rewards program as reflected in the fourth quarter net sales penetration of 81%, up from 77% a year ago. NPower has been an effective tool for increasing customer loyalty and engagement. Our natural grocers branded NPower. Products continue to experience elevated growth in the fourth quarter. Our branded products accounted for 8.4% of total sales, up from 7.8% a year ago. During the quarter, we launched 19 new Natural Grocers brand items, including limited edition flavors of our organic coffee, expanded our household products line, and added new gourmet varieties of frozen pizza. For the year, we launched 80 new products, which like all our Natural Grocers brand products, represent premium quality at compelling prices. Store unit growth and development continues to be a priority for our company. During the fourth quarter, we opened a store in Incline Village, Nevada, which is in the Lake Tahoe region. During fiscal 2024, we opened a total of four new stores and relocated or remodeled four stores. We are pleased with their early performance. Subsequent to the quarter end, we relocated two stores and closed one store. Over the next several years, we are targeting a return to opening between six and eight new stores per year. subject to real estate opportunities and improving construction conditions. In closing, I would like to thank our Good4U crew, their commitment to operational excellence and exceptional customer service. We're instrumental in driving our strong results. We are fortunate to have crew who share an affinity for our founding principles and are dedicated to ensuring that our stores, operations, and supply chain reflect these values. Our record earnings in fiscal 2024 supported the award of significant discretionary incentives for our Good4U crew. Our history of paying discretionary incentives tied to the company's performance unites the organization in driving profitable growth, and reflects our commitment to our crew. With that, I will turn our call over to Todd to discuss our financial results and guidance.