Form 8-K Natural Grocers by Vitam For: Nov 20

�

---

---

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

�

---

�

FORM 8-K

�

---

�

CURRENT REPORT

�

Pursuant to Section�13 or 15(d)�of the

Securities Exchange Act of 1934

�

Date of report (date of earliest event reported): November 20, 2014

�

---

�

Natural Grocers by Vitamin Cottage, Inc.

(Exact name of registrant as specified in its charter)

�

---

�

Delaware	�	001-35608	�	45-5034161
(State or other jurisdiction of incorporation)	�	(Commission File No.)	�	(IRS Employer Identification No.)

�

12612 West Alameda Parkway

Lakewood, Colorado 80228

(Address of principal executive offices) (Zip Code)

�

(303) 986-4600

(Registrants telephone number, including area code)

�

Not Applicable

(Former name or former address, if changed since last report)

�

---

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

�

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

	Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b))

�

	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

---

---

�

�

�

�

Item 2.02�����Results of Operations and Financial Condition.

�

On November 20, 2014, Natural Grocers by Vitamin Cottage, Inc. issued a press release announcing results for its fourth quarter and fiscal year ended September 30, 2014. A copy of the press release is furnished herewith as Exhibit 99.1.

�

The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section. Additionally, the information contained in this Item 2.02 or Exhibit 99.1 shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

�

Item 9.01�����Financial Statements and Exhibits.

�

(d)�����Exhibits.

�

Exhibit�No.	�	Description
99.1	�	Press release of Natural Grocers by Vitamin Cottage, Inc. dated November 20, 2014

�

�

�

�SIGNATURE

�

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�

Dated: November 20, 2014

�

�	Natural Grocers by Vitamin Cottage, Inc.
�	�
�	By:	/s/ Kemper Isely
�	Name:	Kemper Isely
�	Title:	Co-President

�

�

�3

Exhibit 99.1

�

�

Natural Grocers by Vitamin Cottage Announces Fiscal 2014 Fourth Quarter and Full Year Results and Provides Fiscal 2015 Outlook

�

Lakewood, Colorado, November�20, 2014. Natural Grocers by Vitamin Cottage,�Inc. (NYSE: NGVC) today announced results for its fourth fiscal quarter and fiscal year ended September 30, 2014 (fiscal 2014) and provided its outlook for fiscal 2015.

�

In addition to presenting the financial results of Natural Grocers by Vitamin Cottage,�Inc. and its subsidiaries (collectively, the Company) for the fourth quarter and fiscal 2014 and 2013 in conformity with U.S. generally accepted accounting principles (GAAP), the Company is presenting EBITDA, which is a non-GAAP financial measure. The reconciliation from GAAP to this non-GAAP financial measure is provided at the end of this earnings release.

�

Highlights for Fourth Quarter and Fiscal 2014 Compared to Fourth Quarter and Fiscal 2013

�

�

�

Net sales increased 17.8% to $135.7 million in the fourth quarter and increased 20.9% to $520.7 million in the fiscal year

�

�

�

Daily average comparable store sales increased 3.7% in the fourth quarter and increased 5.6% in the fiscal year

�

�

�

Net income increased 43.1% to $3.2 million with diluted earnings per share of $0.14 in the fourth quarter and increased 27.7% to $13.5 million with diluted earnings per share of $0.60 in the fiscal year

�

�

�

EBITDA increased 22.5% to $10.3 million in the fourth quarter and increased 27.2% to $41.5 million in the fiscal year

�

We are pleased with recent improvements in our sales trends, which reached the expectations we outlined on our last earnings call, said Kemper Isely, Co-President. We remain focused on new store growth and have seen strong new store openings in the past few months. We believe these positive results stem from our directed sales initiatives. As we move into fiscal 2015, we expect to continue our 20% annual store growth and to expand both the top and bottom line through our continued focus on customer service and operational excellence.

�

Operating Results  Fourth Quarter Fiscal 2014 Compared to Fourth Quarter Fiscal 2013

�

During the fourth quarter of fiscal 2014, net sales increased $20.5 million, or 17.8% over the same period in fiscal 2013 to $135.7 million due to a $16.3 million increase in sales from new stores and a $4.3 million, or 3.7%, increase in comparable store sales. The 3.7% increase in comparable store sales in the fourth quarter of fiscal 2014 followed a 10.7% increase in the fourth quarter of fiscal 2013 and was driven by a 1.4% increase in daily average transaction count and a 2.3% increase in average transaction size. Daily average mature store sales increased 1.5% in the fourth quarter of fiscal 2014. For fiscal 2014, mature stores include all stores open during or before 2009.

�

Gross profit during the fourth quarter of fiscal 2014 increased 15.7% over the same period in fiscal 2013 to $38.8�million, primarily driven by positive comparable store sales and an increase in the number of stores. Gross profit reflects earnings after both product and occupancy costs. Gross margin was 28.6% during the fourth quarter of fiscal 2014, compared to 29.1% in the fourth quarter of fiscal 2013. Gross margin decreased due to increases in occupancy costs, partially offset by increases in product margin, both as a percentage of sales. Product margin increased across almost all departments, partially offset by a shift in sales mix towards products with lower margin. Additionally, gross margin benefited from operating efficiencies at the Companys bulk food repackaging and distribution center. Occupancy costs as a percentage of sales increased during the fourth quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013, primarily driven by increased average lease expenses at newer stores ⁽¹⁾.

�

Store expenses as a percentage of sales decreased 30 basis points during the fourth quarter of fiscal 2014 compared to the comparable period of fiscal 2013, driven by decreases in salary-related expenses and advertising expenses and partially offset by increases in depreciation expense and, to a lesser extent, an increase in utilities.

�

Administrative expenses as a percentage of sales decreased 30 basis points during the fourth quarter compared to the comparable period of fiscal 2013 as a result of the Companys ability to support additional store investments and sales without proportionate increases in the cost of overhead.

�

�

�

During the fourth quarter of fiscal 2014, both store and administrative expenses were favorably impacted by lower incentive compensation and other discretionary benefits expense, reflecting the Companys pay-for-performance philosophy.

�

Pre-opening and relocation expenses remained flat during the fourth quarter of fiscal 2014 compared to the comparable period of fiscal 2013, primarily due to the number and timing of new store openings. During the fourth quarter of fiscal 2014, three new stores opened compared to four new stores during the fourth quarter of fiscal 2013.

�

Interest expense decreased $0.5 million in the fourth quarter of fiscal 2014 compared to the comparable period of fiscal 2013, primarily due to an increase in capitalized interest expense.

�

Net income increased 43.1% to $3.2 million compared to the comparable period in fiscal 2013 with diluted earnings per share of $0.14 in the fourth quarter of fiscal 2014. Net income in the fourth quarter of fiscal 2014 included $0.1 million of pre-tax share-based compensation expense for the Chief Financial Officer and certain employees who are not named executive officers, compared to $0.5 million in the fourth quarter of fiscal 2013.

�

EBITDA increased $1.9 million, or 22.5%, to $10.3 million, or 7.6% of sales, for the fourth quarter of fiscal 2014 compared to the comparable period in fiscal 2013.

�

Operating Results  Fiscal 2014 Compared to Fiscal 2013

�

In fiscal 2014, net sales increased $90.0 million, or 20.9% over fiscal 2013, to $520.7 million due to a $66.0 million increase in sales from new stores and a $24.0 million, or 5.6%, increase in comparable store sales. Daily average comparable store sales increased 5.6% in fiscal 2014 following an 11.1% increase in fiscal 2013. The 5.6% increase in fiscal 2014 was driven by a 2.3% increase in daily average transaction count and a 3.2% increase in average transaction size. Daily average mature store sales increased 3.4% in fiscal 2014.

�

Gross profit in fiscal 2014 increased 20.5% over fiscal 2013 to $151.5�million, primarily driven by positive comparable store sales and an increase in the number of stores. Gross margin was 29.1% in fiscal 2014, compared to 29.2% in fiscal 2013. Gross margin decreased due to increases in occupancy costs, partially offset by increases in product margin, both as a percentage of sales. Gross margin was positively impacted by increases in product margin across almost all departments, partially offset by a shift in sales mix towards products with lower margin. Additionally, gross margin benefited from operating efficiencies at the Companys bulk food repackaging and distribution center. Occupancy costs as a percentage of sales increased in fiscal 2014 compared to fiscal 2013, primarily driven by increased average lease expenses at newer stores ⁽¹⁾.

�

Store expenses as a percentage of sales remained flat in fiscal 2014 compared to fiscal 2013, driven by a decrease in salary-related expenses and offset by an increase in depreciation expense, and, to a lesser extent, an increase in utilities.

�

Administrative expenses as a percentage of sales decreased 30 basis points in fiscal 2014 compared to fiscal 2013 as a result of the Companys ability to support additional store investments and sales without proportionate increases in the cost of overhead.

�

In fiscal 2014, both store and administrative expenses were favorably impacted by lower incentive compensation and other discretionary benefits expense, reflecting the Companys pay-for-performance philosophy.

�

Pre-opening and relocation expenses increased $0.5 million in fiscal 2014 compared to fiscal 2013, primarily due to the increased number of new store openings, the timing of new store openings and the lease classification for those stores that were opened. In fiscal 2014, the Company opened 15 new stores compared to 13 new stores in fiscal 2013.

�

Interest expense increased $0.3 million in fiscal 2014 compared to fiscal 2013, primarily due to interest expense related to capital and financing lease obligations, partially offset by an increase in capitalized interest expense.

�

Net income increased 27.7% to $13.5 million compared to fiscal 2013 with diluted earnings per share of $0.60 in fiscal 2014. Net income in fiscal 2014 included $0.4 million of pre-tax share-based compensation expense for the Chief Financial Officer and certain employees who are not named executive officers, compared to $0.5 million in fiscal 2013.

�

EBITDA increased $8.9 million, or 27.2%, to $41.5 million, or 8.0% of sales, in fiscal 2014 compared to fiscal 2013.

�

�

(1)

The Company had ten and nine stores accounted for as capital and financing lease obligations for the fourth quarter of fiscal 2014 and 2013, respectively, and for fiscal 2014 and 2013, respectively. For leases accounted for as capital and financing lease obligations, the Company does not record straight-line rent expense in cost of goods sold and occupancy costs, but rather rental payments are recognized as a reduction of the capital and financing lease obligations and as interest expense. The stores that were accounted for as capital and financing lease obligations rather than being reflected as operating leases increased gross margin as a percentage of sales by approximately 55 and 85 basis points in the fourth quarter of fiscal 2014 and 2013, respectively, and 60 and 55 basis points in fiscal 2014 and 2013, respectively. Additionally, accounting for these stores as capital and financing lease obligations rather than operating leases increased EBITDA as a percentage of sales by approximately 60 and 85 basis points in the fourth quarter of fiscal 2014 and 2013, respectively, and 60 basis points for each of fiscal 2014 and 2013, respectively, due to the impact on gross profit, as well as occupancy costs that would have been included in pre-opening expenses.

�

�

Balance Sheet and Cash Flow

�

As of September 30, 2014, the Company had $5.1 million in cash and cash equivalents and no amounts outstanding under its credit facility. The Company expects to have amounts drawn under the line of credit at the end of the first quarter of fiscal 2015 due to the timing of new store openings, including the Natures Pantry transaction (described below), and annual income tax payments.

�

In fiscal 2014, the Company generated $31.7 million in cash from operations and invested $36.5 million in capital expenditures, primarily for new stores.

�

Growth and Development

�

During the fourth quarter of fiscal 2014, the Company opened three new stores, bringing the total store count as of September 30, 2014 to 87 stores located in 14 states. Additionally, the Company completed the remodel of two existing stores during fiscal 2014.

�

Since the start of fiscal 2015, the Company has opened three stores in Golden, CO, Reno, NV and Oklahoma City, OK. As of this release, the Company has five signed leases for stores planned to open in fiscal 2015 in Arizona, Arkansas, Colorado and Kansas. Additionally, the Company recently agreed to purchase substantially all the assets and assume certain liabilities of natural foods retailer Natures Pantry in Independence, Missouri. The transaction is expected to close on December 7, 2014, at which time the store will start to operate as a Natural Grocers by Vitamin Cottage store. The Independence store will be included as one of the 18 stores the Company expects to open during fiscal 2015.

�

Store Level Economics

�

The Company anticipates that in fiscal 2015, new stores will require an average upfront capital investment of approximately $2.2 million consisting of capital expenditures of approximately $1.7 million (net of tenant allowances), initial inventory of approximately $0.3 million (net of payables) and pre-opening expenses of approximately $0.2 million. The Company continues to target approximately four years to recoup the initial net cash investment and approximately 35% cash on cash returns by the end of the fifth year following the opening.

�

Fiscal 2015 Outlook

�

For fiscal 2015 the Company expects:

�

�	Fiscal 2015 Outlook		�
Number of new stores	�	18	�
Number of relocations	�	3	�
Number of remodels	�	2	�
Daily average comparable store sales growth	�	5% to 8%	�
EBITDA as a percent of sales	�	7.3% to 7.5%	�
Net income as a percent of sales	�	2.1% to 2.3%	�
Diluted earnings per share	�	$0.63 to $0.66	�
Capital expenditures (in millions)	�	$45 to $47	�

�

Earnings Conference Call

�

The Company will host a conference call today at 2:30�p.m. Mountain Time (4:30�p.m. Eastern Time) to discuss this earnings release. The dial-in number is 1-888-347-6606 (US); 1-855-669-9657 (Canada); or 1-412-902-4289 (International). The conference ID is Natural Grocers by Vitamin Cottage. A simultaneous audio webcast will be available at http://Investors.NaturalGrocers.com and archived for a minimum of 30 days.

�

�

�

About Natural Grocers by Vitamin Cottage

�

Natural Grocers by Vitamin Cottage,�Inc. (NYSE: NGVC) is a rapidly expanding specialty retailer of natural and organic groceries and dietary supplements whose products must meet strict quality guidelines. The grocery products sold by Natural Grocers may not contain artificial colors, flavors, preservatives, sweeteners, or partially hydrogenated or hydrogenated oils. Natural Grocers flexible small-store format allows it to offer affordable prices in a shopper-friendly retail environment. The Company provides extensive free science-based nutrition education programs to help customers make informed health and nutrition choices. The Company, founded in 1955, has 90 stores in 15 states as of the date of this earnings release.

�

Visit www.NaturalGrocers.com for more information and store locations.

�

Forward-Looking Statements

�

The following constitutes a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, statements in this release are forward-looking statements and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements that are not statements of historical facts are forward-looking statements. Actual results could differ materially from those described in the forward-looking statements because of factors such as changes in the Companys industry, business strategy, goals and expectations concerning the Companys market position, the economy, future operations, margins, profitability, capital expenditures, liquidity and capital resources, other financial and operating information and other risks detailed in the Companys annual report on Form�10-K for the fiscal year ended September�30, 2013 and the Companys subsequent quarterly reports on Form�10-Q. The information contained herein speaks only as of the date of this release and the Company undertakes no obligation to update forward-looking statements.

�

For further information regarding risks and uncertainties associated with the Companys business, please refer to the Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the Companys filings with the Securities and Exchange Commission, including, but not limited to, our Form�10-K for the fiscal ended September 30, 2013 and the Companys subsequent quarterly reports on Form�10-Q, copies of which may be obtained by contacting Investor Relations at 303-986-4600 or by visiting the Companys website at http://Investors.NaturalGrocers.com.

�

�

��

NATURAL GROCERS BY VITAMIN COTTAGE,�INC.

�

Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share data)

�

�

�

�

Three months ended September 30,

�

�

Year ended September 30,

�

�

�

2014

�

�

2013

�

�

2014

�

�

2013

�

Net sales

�

$

135,715

�

�

�

115,175

�

�

�

520,674

�

�

�

430,655

�

Cost of goods sold and occupancy costs

�

�

96,959

�

�

�

81,689

�

�

�

369,172

�

�

�

304,922

�

Gross profit

�

�

38,756

�

�

�

33,486

�

�

�

151,502

�

�

�

125,733

�

Store expenses

�

�

28,394

�

�

�

24,388

�

�

�

108,657

�

�

�

89,935

�

Administrative expenses

�

�

3,801

�

�

�

3,569

�

�

�

14,823

�

�

�

13,479

�

Pre-opening and relocation expenses

�

�

945

�

�

�

955

�

�

�

3,774

�

�

�

3,231

�

Operating income

�

�

5,616

�

�

�

4,574

�

�

�

24,248

�

�

�

19,088

�

Other income (expense):

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Dividends and interest income

�

�



�

�

�

2

�

�

�

2

�

�

�

9

�

Interest expense

�

�

(379

)

�

�

(900

)

�

�

(2,496

)

�

�

(2,166

)

Total other expense, net

�

�

(379

)

�

�

(898

)

�

�

(2,494

)

�

�

(2,157

)

Income before income taxes

�

�

5,237

�

�

�

3,676

�

�

�

21,754

�

�

�

16,931

�

Provision for income taxes

�

�

(2,049

)

�

�

(1,448

)

�

�

(8,281

)

�

�

(6,379

)

Net income

�

$

3,188

�

�

�

2,228

�

�

�

13,473

�

�

�

10,552

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net income per common share:

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic

�

$

0.14

�

�

�

0.10

�

�

�

0.60

�

�

�

0.47

�

Diluted

�

$

0.14

�

�

�

0.10

�

�

�

0.60

�

�

�

0.47

�

Weighted average common shares outstanding:

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic

�

�

22,481,690

�

�

�

22,429,196

�

�

�

22,466,432

�

�

�

22,399,346

�

Diluted

�

�

22,482,842

�

�

�

22,457,043

�

�

�

22,479,835

�

�

�

22,441,382

�

�

�

���

NATURAL GROCERS BY VITAMIN COTTAGE,�INC.

�

Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except per share data)

�

�	�	September 30,						�
�	�	2014		�	�	2013		�
Assets	�	�	�	�	�	�	�	�
Current assets:	�	�	�	�	�	�	�	�
Cash and cash equivalents	�	$	5,113	�	�	�	8,132	�
Restricted cash	�	�		�	�	�	500	�
Short term investments  available-for-sale securities	�	�		�	�	�	1,149	�
Accounts receivable, net	�	�	2,146	�	�	�	2,401	�
Merchandise inventory	�	�	58,381	�	�	�	45,472	�
Prepaid expenses and other current assets	�	�	641	�	�	�	1,097	�
Deferred income tax assets	�	�	832	�	�	�	1,114	�
Total current assets	�	�	67,113	�	�	�	59,865	�
Property and equipment, net	�	�	120,224	�	�	�	98,910	�
Other assets:	�	�	�	�	�	�	�	�
Deposits and other assets	�	�	712	�	�	�	203	�
Goodwill and other intangible assets, net	�	�	900	�	�	�	900	�
Deferred financing costs, net	�	�	36	�	�	�	25	�
Total other assets	�	�	1,648	�	�	�	1,128	�
Total assets	�	$	188,985	�	�	�	159,903	�
Liabilities and Stockholders Equity	�	�	�	�	�	�	�	�
Current liabilities:	�	�	�	�	�	�	�	�
Accounts payable	�	$	33,835	�	�	�	28,918	�
Accrued expenses	�	�	15,822	�	�	�	9,306	�
Capital and financing lease obligations, current portion	�	�	229	�	�	�	174	�
Total current liabilities	�	�	49,886	�	�	�	38,398	�
Long-term liabilities:	�	�	�	�	�	�	�	�
Capital and financing lease obligations, net of current portion	�	�	21,748	�	�	�	19,648	�
Deferred income tax liabilities	�	�	5,409	�	�	�	6,877	�
Deferred rent	�	�	5,842	�	�	�	4,731	�
Leasehold incentives	�	�	7,246	�	�	�	5,716	�
Total long-term liabilities	�	�	40,245	�	�	�	36,972	�
Total liabilities	�	�	90,131	�	�	�	75,370	�
Commitments	�	�	�	�	�	�	�	�
Stockholders equity:	�	�	�	�	�	�	�	�
Common stock, $0.001 par value. Authorized 50,000,000 shares, 22,485,488 and 22,441,253 issued and outstanding, respectively	�	�	22	�	�	�	22	�
Additional paid in capital	�	�	54,552	�	�	�	53,704	�
Retained earnings	�	�	44,280	�	�	�	30,807	�
Total stockholders equity	�	�	98,854	�	�	�	84,533	�
Total liabilities and stockholders equity	�	$	188,985	�	�	�	159,903	�

�

�

�

NATURAL GROCERS BY VITAMIN COTTAGE,�INC.

�

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

�

�	�	Year ended September 30,						�
�	�	2014		�	�	2013		�
Operating activities:	�	�	�	�	�	�	�	�
Net income	�	$	13,473	�	�	�	10,552	�
Adjustments to reconcile net income to net cash provided by operating activities:	�	�	�	�	�	�	�	�
Depreciation and amortization	�	�	17,212	�	�	�	13,496	�
Loss on disposal of property and equipment	�	�	1	�	�	�	43	�
Share-based compensation	�	�	532	�	�	�	602	�
Excess tax benefit from share-based compensation	�	�	(399	)	�	�	(592	)
Deferred income tax (benefit) expense	�	�	(1,186	)	�	�	2,452	�
Non-cash interest expense	�	�	19	�	�	�	47	�
Interest accrued on investments and amortization of premium	�	�	9	�	�	�	27	�
Other amortization	�	�		�	�	�	26	�
Changes in operating assets and liabilities	�	�	�	�	�	�	�	�
Decrease (increase) in:	�	�	�	�	�	�	�	�
Accounts receivable, net	�	�	255	�	�	�	(546	)
Income tax receivable	�	�	612	�	�	�	(601	)
Merchandise inventory	�	�	(12,909	)	�	�	(7,928	)
Prepaid expenses and other assets	�	�	(665	)	�	�	105	�
Increase in:	�	�	�	�	�	�	�	�
Accounts payable	�	�	5,202	�	�	�	4,480	�
Accrued expenses	�	�	6,952	�	�	�	2,283	�
Deferred rent and leasehold incentives	�	�	2,641	�	�	�	1,271	�
Net cash provided by operating activities	�	�	31,749	�	�	�	25,717	�
Investing activities:	�	�	�	�	�	�	�	�
Acquisition of property and equipment	�	�	(36,512	)	�	�	(39,708	)
Proceeds from sale of property and equipment	�	�		�	�	�	5,005	�
Purchase of available-for-sale securities	�	�		�	�	�	(521	)
Proceeds from sale of available-for-sale securities	�	�		�	�	�	90	�
Proceeds from maturity of available-for-sale securities	�	�	1,140	�	�	�	1,010	�
Decrease (increase) in restricted cash	�	�	500	�	�	�	(500	)
Net cash used in investing activities	�	�	(34,872	)	�	�	(34,624	)
Financing activities:	�	�	�	�	�	�	�	�
Borrowings under credit facility	�	�	46,440	�	�	�	81	�
Repayments under credit facility	�	�	(46,440	)	�	�	(81	)
Repayments under notes payable, related party	�	�		�	�	�	(282	)
Capital and financing lease obligations payments	�	�	(182	)	�	�	(121	)
Excess tax benefit from share-based compensation	�	�	399	�	�	�	592	�
Equity issuance costs and BVC transaction costs	�	�		�	�	�	(268	)
Payments on withholding tax for restricted stock unit vesting	�	�	(83	)	�	�	(155	)
Loan fees paid	�	�	(30	)	�	�	(18	)
Net cash provided by (used in) financing activities	�	�	104	�	�	�	(252	)
Net (decrease) in cash and cash equivalents	�	�	(3,019	)	�	�	(9,159	)
Cash and cash equivalents, beginning of year	�	�	8,132	�	�	�	17,291	�
Cash and cash equivalents, end of year	�	$	5,113	�	�	�	8,132	�
Supplemental disclosures of cash flow information:	�	�	�	�	�	�	�	�
Cash paid for interest	�	$	16	�	�	�	7	�
Cash paid for interest on capital and financing lease obligations, net of capitalized interest of $364 and $0, respectively	�	�	2,423	�	�	�	2,036	�
Income taxes paid	�	�	3,762	�	�	�	3,916	�
Supplemental disclosures of non-cash investing and financing activities:	�	�	�	�	�	�	�	�
Acquisition of property and equipment not yet paid	�	$	3,260	�	�	�	3,545	�
Property acquired through capital and financing lease obligations	�	�	2,300	�	�	�	14,372	�

�

�

��

NATURAL GROCERS BY VITAMIN COTTAGE,�INC.

�

Non-GAAP Financial Measure
(Unaudited)

�

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides information regarding EBITDA which is not in accordance with, or an alternative to, GAAP (i.e. a non-GAAP measure). The Company defines EBITDA as net income before interest expense, provision for income tax and depreciation and amortization.

�

The Company believes EBITDA provides additional information about (i) operating performance, because it assists in comparing the operating performance of stores on a consistent basis, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii)�the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a measure in the Companys incentive compensation payments.

�

Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation from net income, the Company believes it is enhancing investors understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives.

�

The Companys competitors may define EBITDA differently, and as a result, the Companys measure of EBITDA may not be directly comparable to EBITDA of other companies. Items excluded from EBITDA are significant components in understanding and assessing financial performance.

�

EBITDA is a supplemental measure of operating performance that does not represent and should not be considered in isolation or as an alternative to, or substitute for, net income or other financial statement data presented in the consolidated financial statements as indicators of financial performance. EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Companys results as reported under GAAP. EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.

�

The following table reconciles net income to EBITDA (dollars in thousands):

�

�

�	�	Three�months�ended September�30,				�	Year�ended September�30,			�
�	�	2014		�	2013	�	2014	�	2013	�
Net income�	�	$	3,188	�	2,228	�	13,473	�	10,552	�
Interest expense	�	379		�	900	�	2,496	�	2,166	�
Provision for income taxes	�	2,049		�	1,448	�	8,281	�	6,379	�
Depreciation and amortization	�	4,656		�	3,806	�	17,212	�	13,496	�
EBITDA	�	$	10,272	�	8,382	�	41,462	�	32,593	�

�

�

CONTACT: Ashley MacLeod, Director of Finance and Investor Relations, 303-986-4600, [email protected]

�

8

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Natural Grocers® Invites Oklahoma City Community to Celebrate Grand Re-Opening at New Location on May 2, 2024
• Cybeats Responds to OTC Markets Request on Recent Promotional Activity
• Riding the Trend: Baros Maldives' Immersive Water Therapy