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Press Release: Natural Grocers by Vitamin Cottage -2-

· 02/04/2021 16:10
NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data) Three months ended December 31, 2020 2019 Net sales $ 265,045 230,030 Cost of goods sold and occupancy costs 192,020 169,506 Gross profit 73,025 60,524 Store expenses 60,330 51,427 Administrative expenses 7,304 5,819 Pre-opening and relocation expenses 189 430 Operating income 5,202 2,848 Interest expense, net (510) (536) Income before income taxes 4,692 2,312 Provision for income taxes (1,060) (444) Net income $ 3,632 1,868 Net income per common share: Basic $ 0.16 0.08 Diluted $ 0.16 0.08 Weighted average number of shares of common stock outstanding: Basic 22,558,946 22,471,350 Diluted 22,690,817 22,542,967 NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Balance Sheets (Dollars in thousands, except per share data) December 31, September 30, 2020 2020 Assets (unaudited) Current assets: Cash and cash equivalents $ 24,661 28,534 Accounts receivable, net 6,703 8,519 Merchandise inventory 99,598 100,175 Prepaid expenses and other current assets 3,754 6,185 Total current assets 134,716 143,413 Property and equipment, net 145,105 147,929 Operating lease assets, net 333,735 339,239 Finance lease assets, net 39,275 40,096 Deposits and other assets(1) 622 647 Goodwill and other intangible assets, net 10,638 10,468 Total other assets 384,270 390,450 Total assets $ 664,091 681,792 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 65,750 69,163 Accrued expenses 23,306 24,995 Term loan facility, current portion 1,750 -- Operating lease obligations, current portion 32,196 32,156 Finance lease obligations, current portion 2,929 2,836 Total current liabilities 125,931 129,150 Long-term liabilities: Term loan facility, net of current portion 33,250 -- Operating lease obligations, net of current portion 320,004 325,641 Finance lease obligations, net of current portion 38,748 39,506 Deferred income tax liabilities, net 16,000 14,429 Total long-term liabilities 408,002 379,576 Total liabilities 533,933 508,726 Stockholders' equity: Common stock, $0.001 par value, 50,000,000 shares authorized, and 22,563,649 and 22,546,765 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively 23 23 Additional paid-in capital 56,918 56,752 Retained earnings 73,217 116,291 Total stockholders' equity 130,158 173,066 Total liabilities and stockholders' equity $ 664,091 681,792 (1) Certain prior year amounts have been combined for consistency with current year presentation. NATURAL GROCERS BY VITAMIN COTTAGE, INC. Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) Three months ended December 31, 2020 2019 Operating activities: Net income $ 3,632 1,868 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,637 7,707 Loss on disposal of property and equipment -- 1 Lease exit costs 105 -- Share-based compensation 248 279 Deferred income tax expense 1,571 424 Non-cash interest expense 3 3 Changes in operating assets and liabilities Decrease (increase) in: Accounts receivable, net 1,816 378 Merchandise inventory 577 (1,966) Prepaid expenses and other assets (550) (371) Income tax receivable 3,004 29 Operating lease asset 7,664 7,451 (Decrease) increase in: Operating lease liability (7,955) (7,625) Accounts payable (3,720) (669) Accrued expenses (1,689) 2,971 Net cash provided by operating activities 12,343 10,480 Investing activities: Acquisition of property and equipment (3,273) (10,982) Acquisition of other intangibles (427) (1,008) Proceeds from property insurance settlements -- 17 Net cash used in investing activities (3,700) (11,973) Financing activities: Borrowings under revolving facility -- 113,000 Repayments under revolving facility -- (110,400) Borrowings under term loan facility 35,000 -- Finance lease obligation payments (675) (519) Dividend to shareholders (46,706) (1,573) Loan fees paid (53) (25) Payments on withholding tax for restricted stock unit vesting (82) (47) Net cash (used in) provided by financing activities (12,516) 436 Net decrease in cash and cash equivalents (3,873) (1,057) Cash and cash equivalents, beginning of period 28,534 6,214 Cash and cash equivalents, end of period $ 24,661 5,157 Supplemental disclosures of cash flow information: Cash paid for interest $ 8 163 Cash paid for interest on finance lease obligations, net of capitalized interest of $37 and $45, respectively 463 373 Income taxes paid -- 10 Supplemental disclosures of non-cash investing and financing activities: Acquisition of property and equipment not yet paid $ 2,778 6,015 Acquisition of other intangibles not yet paid 196 482 Property acquired through operating lease obligations 2,769 6,378 Property acquired through finance lease obligations 106 1,322 NATURAL GROCERS BY VITAMIN COTTAGE, INC. Non-GAAP financial measures (Unaudited) EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP. We define EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company's actual operating performance, including certain items such as impairment charges, store closing and lease exit costs and non-recurring items. The adjustment to EBITDA for the three months ended December 31, 2020 is related to lease exit costs associated with one store that closed in the first quarter of fiscal year 2019. The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands: Three months ended December 31, 2020 2019 Net income $ 3,632 1,868 Interest expense, net 510 536 Provision for income taxes 1,060 444 Depreciation and amortization 7,637 7,707

For further information regarding risks and uncertainties associated with the Company's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Form 10-K and the Company's 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 Company's website at http://Investors.NaturalGrocers.com.

Investor Contact:

Reed Anderson, ICR 646-277-1260, reed.anderson@icrinc.com

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February 04, 2021 16:10 ET (21:10 GMT)