Natural Grocers by Vitamin Cottage, Inc.

Good day, ladies and gentlemen. Welcome to the Natural Grocers' fourth quarter and fiscal year 2025 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. 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 2025 earnings conference call. On the call with me today are Kemper Isley, Co-President, and Richard Halle, Chief Financial Officer. As a reminder, certain information provided during this conference call, including the company's outlook for fiscal 2026, 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 10-Q and 10-K. The company undertakes no obligation to update forward-looking statements. Our remarks today include references to adjusted EBITDA, which is a non-GAAP measure. Please see our earnings release for a reconciliation of adjusted EBITDA to net income. Today's earnings 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 pleased with our fourth quarter performance, with sales in line with guidance and diluted earnings per share above guidance. On today's call, I will highlight our financial results, including performance drivers, and provide an update on our key operational initiatives. Then Rich will discuss our fourth quarter results in greater detail and review our fiscal year 2026 outlook. Our fourth quarter sales were in line with guidance. Daily average comparable store sales increased 4.2% and on a two-year basis increased 11.3%. The moderation in fourth quarter sales comps compared to the third quarter was driven by several factors. We cycled 7% comps in each of the fourth quarters of the previous two fiscal years. As previously disclosed, UNFI's June 2025 cybersecurity incident constrained UNFI's ability to fulfill orders and distribute products to our stores and had a direct impact on our sales in June and July. Additionally, uncertainty in the economic environment has persisted and we saw consumer behavior shift toward more cautious retail spending in the fourth quarter. Over the past several years, we have focused on operational execution, including refining targeted promotions and store productivity initiatives. That ongoing effort combined with expense leverage from higher sales resulted in an operating margin improvement of 90 basis points for the fourth quarter, driving our fiscal year 2025 diluted earnings per share to a record $2 per share. We are proud that fiscal 2025 represented another year of record sales and earnings. Additionally, fiscal 2025 was our 22nd consecutive year of positive comparable store sales growth. Consumers continue to be drawn to our differentiated offering of high-quality natural and organic products reflecting their prioritization of health and wellness, including food and nutrition. We believe that consumers' prioritization of health and wellness will prove to be resilient. While we are seeing some macro pressures affecting the broader retail landscape, we believe that our commitment to always affordable prices provides compelling value for our customers, strengthening our competitive position during periods of economic uncertainty. Next, I will share an update on our key priorities that have fueled recent growth and are expected to drive our long-term success. We continue to enhance the personalization and interactivity of our NPower Rewards Program offerings. During the fourth quarter, NPower net sales penetration held strong at 82%. The maturity and high penetration of our NPower Rewards Program enables efficient and relevant customer engagement, including communicating our differentiation to new members. personalizing offers to tenured members, or presenting special offers to customers who haven't engaged with us recently. Our natural grocers branded products continue to experience elevated growth In the fourth quarter, our house branded products accounted for 8.8% of total sales, up from 8.4% a year ago. During fiscal 2025, we extended our natural grocers brand offerings with the launch of 119 new items, all of which exhibit premium quality at compelling prices. Accelerating new store growth is another core element of our strategy. In fiscal 2025, we opened two new stores, relocated two stores, and remodeled one store. Today, we are reiterating our plan of opening six to eight new stores in fiscal 2026, underscoring the quality of our pipeline and execution capabilities. We are committed to four to five percent annual new store unit growth for the foreseeable future. We also remain committed to enhancing value for our stockholders by maintaining a balanced approach to capital allocation. In addition to investing in our business to drive faster unit growth, we are proud to announce that we are increasing the quarterly cash dividend by 25% to 15 cents per common share, reflecting our strong fiscal 2025 operating performance and financial position. as well as confidence in our ability to create long-term stockholder value. In closing, I would like to thank our Good4U crew, their commitment to operational excellence and exceptional customer service were instrumental in driving our strong results. We are fortunate to have a crew who share an affinity for our founding principles and are dedicated to ensuring that our stores, operations, and supply chain reflect these values. Now, I will turn our call over to Rich to discuss our financial results in greater detail and fiscal 2026 guidance.