Natural Grocers by Vitamin Cottage, Inc.

Good day ladies and gentlemen. Welcome to the Natural Grosses second quarter physical year 2026 earnings conference call. At this time all participants are in listen only mode. Later we'll conduct a question and answer section and instruction 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 Second Quarter Fiscal Year 2026 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 reconciliation of adjusted EBITDA to net income. Today's earnings release will be 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. During today's call, I will provide an overview of our financial results and highlight progress on initiatives driving long-term value creation. Then Rich will discuss the second quarter results in greater detail and review our fiscal year guidance. We performed well in a challenging environment. driven by strong store-level execution and disciplined expense management, delivering diluted earnings per share growth of 3.6%. There are a few underlying trends I want to highlight. In the second quarter, comparable store sales increased 0.5%, while cycling an 8.9% comp last year. On a two-year basis, comps of 9.4% continue to demonstrate solid growth relative to the broader grocery retail industry. We believe the second quarter sales trends reflected continued economic uncertainty in value-seeking consumer spending behaviors observed broadly across the grocery retail sector. Furthermore, in the second quarter, we continued to see strong membership gains in our NPower Rewards program, and net sales penetration increased three percentage points to 84%, highlighting our customers' appreciation for the program's value and benefits. NPower remains an effective tool for optimizing promotional activity and strengthening customer engagement. Natural Grocers is the value option in natural and organic grocery retail. Our marketing and communications continue to feature our always affordable prices, including the even more affordable campaign. which highlights a rotating assortment of staples, including our Natural Grocers brand products. We believe that consumer prioritization of health and wellness, including food and nutrition, is growing and enduring. Our differentiated natural and organic offering, supported by rigorous standards and our always affordable pricing strategy, continues to deliver strong value and reinforce our competitive positioning. Next, I will highlight an important milestone, which is consistent with management's long-term focus. During the second quarter, we successfully completed a major upgrade to our enterprise resource planning system. The ERP platform supports the majority of our functional areas. making this the most comprehensive systems implementation the company has undertaken to date. The successful execution reflects the dedication and cross-functional collaboration of our teams. The upgraded system enhances operational efficiency, improves data visibility, and provides a scalable foundation to support future growth and expand functionality. including data analytics and operational efficiencies, leveraging business intelligence tools. We've also made progress on store development as another lever driving our long-term value. During the second quarter, we opened one new store, and subsequent to the quarter, we relocated one store and opened an additional store. We're encouraged by the productivity of our new stores and relocations. We are on track to open six to eight new stores in fiscal 2026. We believe we have significant opportunities to expand our store footprint and are targeting a 4-5% annual new store unit growth rate for the foreseeable future. Finally, I would like to express my appreciation to our crew for their continued commitment to delivering an exceptional shopping experience, the best-in-class customer service provided by our Good4U crew, is a key element of our differentiated offering. Now I will turn our call over to Rich to discuss our financial results in greater detail and our fiscal 2026 guidance.