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Cyanotech Reports Financial Results for the First Quarter of Fiscal 2023

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Cyanotech Corporation a world leader in microalgae-based, high-value nutrition and health dietary supplement products, announced financial results for the first quarter of fiscal year 2023, ended June 30, 2022.

Commenting on the first quarter fiscal 2023 results, Cyanotech’s President and Chief Executive Officer, Matthew K. Custer, said: “The disappointing results in the first quarter were driven primarily by the $2.2 million decrease in sales and a higher cost per kilo of astaxanthin. Lower sales in the quarter related to timing of shipments to a Nutrex customer as we transitioned to their selling platform in the prior year, as well as a decrease in bulk spirulina sales. The increase in cost for astaxanthin was driven by lower production in the first quarter due to staff shortages. Production levels normalized late in the first quarter.”

First Quarter Fiscal 2022
Cyanotech reported net sales of $6,716,000 for the first quarter of fiscal 2023 compared to $8,964,000 for the first quarter of fiscal 2022, a decrease of 25.1%. Gross profit was $2,318,000, with gross profit margin of 34.5%, compared to gross profit of $3,672,000, with gross profit margin of 41.0%. Operating loss for the first quarter of fiscal 2023 was $425,000 compared to operating income of $619,000 in the same period of the prior year. Net loss for the current fiscal quarter was $472,000, or $0.08 per diluted share, compared to net income of $520,000, or $0.08 per diluted share, for the same period of the prior year.

Trailing Twelve Months
For the trailing twelve months ended June 30, 2022, compared to the trailing twelve months ended June 30, 2021, net sales were $33,720,000 compared to $33,957,000. Gross profit was $12,212,000, with gross profit margin of 36.2%, compared to $11,813,000 and 34.8%. Net income was $1,161,000, or $0.19 per diluted share, compared to net income of $1,302,000, or $0.21 per diluted share, which included $1,389,000 for the forgiveness of the loan under the Paycheck Protection Program.

Please review the Company’s Form 10-Q for the period ended June 30, 2022 for more detailed information.

About Cyanotech
Cyanotech Corporation, a world leader in microalgae technology for more than 30 years, produces BioAstin® Hawaiian Astaxanthin® and Hawaiian Spirulina Pacifica®. These all-natural, dietary ingredients and supplements leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. The Company’s mission is to fulfill the promise of whole health through Hawaiian microalgae. Cyanotech’s BioAstin® offers superior antioxidant activity which supports skin, eye and joint health, as well as recovery from exercise*. Cyanotech’s Spirulina products offer nutrition that supports cardiovascular health and immunity*. All Cyanotech products are produced from microalgae grown at our 96-acre facility in Kona, Hawaii using patented and proprietary technology and are Generally Recognized as Safe (“GRAS”) for use in food products. Cyanotech sells its products direct to consumers at retail locations in the United States and online at www.nutrex-hawaii.com and also distributes to dietary supplement, nutraceutical and cosmeceutical manufacturers and marketers. The Company is regulated by the Food and Drug Administration. Visit www.cyanotech.com for more information.

*These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

 

“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995 Besides statements of present fact and historical fact, this press release may contain forward-looking statements. Forward-looking statements relate to the future and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution against relying on forward-looking statements. Important factors that could change actual, future results include: changes in sales levels to our largest customers, weather patterns in Hawaii, production problems, risks associated with new products, foreign exchange fluctuations, and availability of financing, as well as national and global political, economic, business, competitive, market and regulatory conditions. Other factors are more fully detailed in the Company’s annual Form 10-K filings with the Securities and Exchange Commission.

Financial Tables Follow: The following tables do not contain footnotes or other information contained in the Company’s Form 10-Q for the first quarter fiscal 2023 ended June 30, 2022, which can be found on the Cyanotech website (www.cyanotech.com) under Investors>Investor Filings upon filing. As such, the following Financial Tables are provided only as a guide and other factors are more fully detailed in the Company’s annual Form 10-K filings with the Securities and Exchange Commission.

Metro reports 2022 third quarter results

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“We are pleased with the performance of our food and pharmacy businesses in the third quarter, which was achieved in a challenging operating environment with increasing inflationary pressures as well as ongoing labour shortages that are impacting the supply chain and our operations. I want to thank our teams who strive to deliver the best value possible to customers in these inflationary times with our multiple formats, effective promotional strategies and strong private label offering. Finally, we are on track with our supply chain modernization program as the transition to our fully automated frozen food distribution center in Toronto is now complete and the ramp-up is progressing well”, declared Eric La Flèche, President and Chief Executive Officer.

METRO INC. announced its results for the third quarter of fiscal 2022 ended July 2, 2022.

2022 THIRD QUARTER HIGHLIGHTS

  •  Sales of $5,865.5 million, up 2.5%
  •  Food same-store sales up 1.1%
  •  Pharmacy same-store sales up 7.2%
  •  Net earnings of $275.0 million, up 9.0% and adjusted net earnings(1) of $283.8 million, up 8.7%
  •  Fully diluted net earnings per share of $1.14, up 10.7%, and adjusted fully diluted net earnings per share(1)
    of $1.18, up 11.3%

OPERATING RESULTS

SALES

Sales in the third quarter of Fiscal 2022 remained strong, reaching $5,865.5 million, up 2.5% versus elevated sales in the third quarter of 2021 due to the pandemic. Food same-store sales were up 1.1% (down 3.6% in 2021) versus the same quarter last year. Online food sales were flat versus last year (up 19.0% in 2021). Our food basket inflation was about 8.5% (5.0% in the previous quarter). Pharmacy same-store sales were up 7.2% (7.6% in 2021), with a 5.6% increase in prescription drugs supported by COVID-related activities such as the distribution of rapid tests and a 10.7% increase in front-store sales, primarily driven by over-the-counter products and cosmetics.

Sales in the first 40 weeks of Fiscal 2022 totalled $14,456.3 million, up 1.9% compared to $14,191.0 million for the corresponding period of 2021.

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION

This earnings measurement excludes financial costs, taxes, depreciation and amortization.

Operating income before depreciation and amortization for the third quarter of Fiscal 2022 totalled $565.1 million, or 9.6% of sales, an increase of 5.9% versus the corresponding quarter of Fiscal 2021. Included in the third quarter of Fiscal 2022 are $7.7 million of direct costs related to the one-week labour conflict and new collective agreement ratification with our distribution center employees in Toronto offset by a non-recurring gain on the sale of assets of $8.7 million ($5.1 million in 2021). Operating income before depreciation and amortization for the first 40 weeks of Fiscal 2022 totalled $1,403.2 million or 9.7% of sales, up 5.6% versus the corresponding period of 2021.

Gross margin on sales for the third quarter and the first 40 weeks of Fiscal 2022 were 19.8% and 19.9% respectively,  the same percentages as the corresponding periods of 2021. A slight decline in our food division margin in the third quarter was compensated by a stronger pharmacy performance. The gross margin for the third quarter of Fiscal 2022 also included $5.3 million of direct costs related to the one-week labour conflict with our distribution center employees in Toronto.

Operating expenses as a percentage of sales for the third quarter of Fiscal 2022 were 10.1% versus 10.5% for the corresponding quarter of 2021 mainly due to the reduction in COVID-related costs. Operating expenses for the third quarter of Fiscal 2022 were impacted by $2.4 million of direct costs related to the one-week labour conflict and new collective agreement ratification with our distribution center employees in Toronto offset by a non-recurring gain on the sale of assets of $8.7 million ($5.1 million in 2021). For the first 40 weeks of Fiscal 2022, operating expenses as a percentage of sales were 10.2% versus 10.5% in 2021.

DEPRECIATION AND AMORTIZATION AND NET FINANCIAL COSTS

Total depreciation and amortization expense for the third quarter of Fiscal 2022 was $154.7 million versus $149.4 million for the corresponding quarter of 2021. This increase reflects the additional investments in supply chain and logistics as well as in-store technology. For the first 40 weeks of Fiscal 2022, total depreciation and amortization expenses were $383.5 million versus $367.5 million for the corresponding period of 2021.

Net financial costs for the third quarter of Fiscal 2022 were $35.8 million compared with $42.1 million for the corresponding quarter of 2021. For the first 40 weeks of Fiscal 2022, net financial costs were $92.3 million compared with $104.8 million for the corresponding period of 2021. The reduction is mainly due to lower debt, lower borrowing rates on new debt and higher capitalized interest.

INCOME TAXES

The income tax expense of $99.6 million for the third quarter of Fiscal 2022 represented an effective tax rate of 26.6% compared with an income tax expense of $89.7 million and an effective tax rate of 26.2% in the third quarter of Fiscal 2021. The 40-week period income tax expense of $246.6 million for Fiscal 2022 and $224.9 million for Fiscal 2021 represented an effective tax rate of 26.6% and 26.3% respectively.

NET EARNINGS AND ADJUSTED NET EARNINGS(1)

Net earnings for the third quarter of Fiscal 2022 were $275.0 million compared with $252.4 million for the corresponding quarter of 2021, while fully diluted net earnings per share were $1.14 compared with $1.03 in 2021, up 9.0% and 10.7% respectively. Excluding the specific item shown in the table below, adjusted net earnings(1) for the third quarter of Fiscal 2022 totalled $283.8 million compared with $261.2 million for the corresponding quarter of 2021, and adjusted fully diluted net earnings per share(1) amounted to $1.18 versus $1.06, up 8.7% and 11.3% respectively.

Net earnings for the first 40 weeks of Fiscal 2022 were $680.8 million compared with $631.7 million for the corresponding period of 2021, while fully diluted net earnings per share were $2.81 compared with $2.54 in 2021, up 7.8% and 10.6%, respectively. Excluding the specific item shown in the table below, adjusted net earnings(1) for the first 40 weeks of Fiscal 2022 totalled $702.7 million compared with $653.6 million for the corresponding period of 2021, and adjusted fully diluted net earnings per share(1) amounted to $2.90 versus $2.63, up 7.5% and 10.3%, respectively.

Net earnings adjustments(1)

NORMAL COURSE ISSUER BID PROGRAM

Under the current normal course issuer bid program, the Corporation may repurchase up to 7,000,000 of its Common Shares between November 25, 2021, and November 24, 2022. Between November 25, 2021, and July 29, 2022, the Corporation repurchased 3,800,000 Common Shares at an average price of $67.38, for a total consideration of $256.0 million.

DIVIDENDS

On August 9, 2022, the Board of Directors declared a quarterly dividend of $0.275 per share, the same amount declared last quarter.

FORWARD-LOOKING INFORMATION

We have used, throughout this report, different statements that could, within the context of regulations issued by the Canadian Securities Administrators, be construed as being forward-looking information. In general, any statement contained herein that does not constitute a historical fact may be deemed a forward-looking statement. Expressions such as “predict”, “expect” and other similar expressions are generally indicative of forward-looking statements. The forward-looking statements contained herein are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, our annual budget, as well as our 2022 action plan.

These forward-looking statements do not provide any guarantees as to the future performance of the Corporation and are subject to potential risks, known and unknown, as well as uncertainties that could cause the outcome to differ significantly. The arrival of a new competitor is an example of the risks described under the “Risk Management” section of the 2021 Annual Report which could have an impact on these statements. As with the preceding risks, the COVID-19 pandemic constitutes a risk that could have an impact on the business, operations, projects and performance of the Corporation as well as on the forward-looking statements contained in this document.

We believe these statements to be reasonable and pertinent as at the date of publication of this report and represent our expectations. The Corporation does not intend to update any forward-looking statement contained herein, except as required by applicable law.

NON-IFRS MEASUREMENTS

In addition to the International Financial Reporting Standards (IFRS) earnings measurements provided, we have included certain non-IFRS earnings measurements. These measurements are presented for information purposes only. They do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measurements presented by other public companies.

ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION, ADJUSTED NET EARNINGS AND ADJUSTED FULLY DILUTED NET EARNINGS PER SHARE

Adjusted operating income before depreciation and amortization, adjusted net earnings and adjusted fully diluted net earnings per share are earnings measurements that exclude some items that must be recognized under IFRS. They are non-IFRS measurements. We believe that presenting earnings without these items, which are not necessarily reflective of the Corporation’s performance, leaves readers of financial statements better informed as to the current period and corresponding prior year’s period’s operating earnings, thus enabling them to better perform trend analysis, evaluate the Corporation’s financial performance and judge its future outlook. The exclusion of these items does not imply that they are non-recurring.

OUTLOOK(2)

We continue to face higher than normal inflationary pressures and labour shortages, and it is difficult to predict how long this situation will last. If prolonged, this environment could put pressure on margins. In the short term, we expect same-store food sales to grow at a higher rate than in recent quarters as we are now cycling periods of last year without significant pandemic restrictions. On the pharmacy side, we expect growth in prescriptions to moderate versus year-to-date levels given the high number of visits to physicians in the fourth quarter of last year. We also expect front-of-store revenues to remain strong, namely driven by over-the-counter product sales.

Inflation Hits Organic Fresh Produce in Q2; Sales Increase 3.7 Percent, Volume Declines 2.8 Percent

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Higher retail prices of organic fresh produce during the second quarter of 2022 generated a 3.7 percent increase in total organic dollars but also contributed to a decline in the organic volume of 2.8 percent, according to Q2 2022 Organic Produce Performance Report issued by the Organic Produce Network (OPN) and Category Partners.

Overall, organic fresh produce pricing increased by 6.7 percent for Q2/2022 compared to the same period last year, with sales for the quarter topping $2.4 billion.

At the same time, conventional produce’s average price increased by more than 9 percent compared to the same period last year, with total sales of $18.1 billion. The Q2 2022 Organic Produce Performance Report uses Nielsen IQ syndicated data to track and report the performance of organic fresh produce—and specifically the top 20 leading organic categories.

The report suggests consumers are watching grocery spending carefully as inflation often takes its toll on higher-priced items, which would include many organic fresh produce items. “Seeing a decline in organic volume for Q2 suggests food budgets are under stress in many US households,” said Tom Barnes, CEO of Category Partners. “It’s common to see budget-centric consumers trade down, substituting for lower-priced conventional items or shifting from a high-priced organic item to a cheaper organic alternative from another category.”

Barnes believes organic substitution explains why organic bananas had a particularly strong quarter in Q2. “Bananas are one of the lowest-priced organic fruits and have the smallest price spread between conventional and organic. For the quarter, while nearly every other organic fruit declined in volume, bananas increased in both dollars (+4.3 percent) and volume (+4.0 percent). So for budget-focused consumers still wanting to buy organic, bananas provided a cost-effective option. Suppliers need to be aware of shifting consumer purchase drivers and develop strategies to keep shoppers buying,” he said.

Geographically, all four regions of the US showed increases in sales and decreases in volume for the quarter. Organic performance during Q2/2022 was weakest in the Northeast, where dollars increased by a mere 0.4 percent, and volume fell by 6.1 percent. The South continues to show the most improvement year over year, and with a fairly low ACV compared to the Northeast and West, data suggests the South is poised for continued growth.

Despite the minor decline in volume, OPN Co-founder and CEO Matt Seeley is bullish on the long-term prospects for the growth of organic fresh produce. “While there are likely some difficult months ahead, the long-term potential for continued organic fresh produce growth remains unchanged,” Seeley said. “Inflation and supply chain challenges have impacted pricing in the short term; however, organic fresh produce will remain an important component of weekly food shopping as consumers look for healthy, safe, and nutritious products for their families.”

Read more: https://www.perishablenews.com/produce/inflation-hits-organic-fresh-produce-in-q2-sales-increase-3-7-percent-volume-declines-2-8-percent/

D2Fit Nutrition Taps Into the Power of Collagen and Biotin for Better Workout Results

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Fitness is a complex word. It’s often associated with exercise — and rightly so. The ability to work out, burn calories, and build muscle are all part of a good fitness routine. But a quality regimen needs to go further than caloric output. It also needs to incorporate the right foods and supplements into the mix.

That’s why Dance2Fit founder Jessica Bass James launched her spin-off brand, D2Fit Nutrition.

The industry fitness leader spent the last few years amassing an international audience for her Dance2Fit program. Many of her followers regularly tune in for live online sessions led by James herself. Others attend local chapters of the fitness brand run by certified Dance2Fit instructors. “We were working on the remote fitness option far before the pandemic was a factor,” James explains, “Our hybrid approach to exercise and fitness allows anyone to participate, whether it’s in person or from the comfort of their living room.” The health and fitness guru goes on to explain what drove her decision to start D2Fit Nutrition, “I knew there had to be more than just a good exercise routine to help these amazing women stay fit over the long haul. They needed the fuel to keep the fire going.”

The Dance2Fit crowd is primarily made up of, in the words of James, want to “women who want to look and feel their best.” This larger calling to foster genuine, long-term health is why James created D2Fit Nutrition. The range includes a whey protein option, a 4-in-1 daily kickstart, and a multi-collagen preworkout formula.

The last item comes from James’ own unique “special blend”of collagen and biotin. The latter is a B complex vitamin that helps the body source energy from the food it consumes. Collagen is also associated with key fitness goals, such as muscle mass, addressing joint pain, and even weight loss.

Both biotin and collagen have also been connected to healthy hair, skin, and nails. This dual impact on exercise and appearance makes the D2Fit Multi Collagen Preworkout an ideal way to boost energy, focus, and endurance in the short term while also enhancing long term skin, hair, nail, and joint health. To top it off, the formula comes in a delectable sour gummy flavor that makes it as easy to consume as it is effective to use.

James’ goal throughout her company’s rise to notoriety has been to help improve the lives of women around the world. She is excited to continue to do so on a daily basis, whether that’s through a lively online exercise session, an effective fitness supplement, or a combination of the two.

Afresh Secures $115 Million in Series B Funding

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Afresh Secures $115 Million in Series B Funding and Rolls Out its Fresh Food Technology to Thousands of Stores Across the US

Afresh, the leading AI-powered fresh food technology provider, today announced a $115 million Series B funding round led by Spark Capital and with participation from Insight Partners, VMG Partners, and Bright Pixel Capital. Walter Robb, senior executive partner at S2G Ventures and former co-CEO of Whole Foods Market also joins the round. All prior investors, including Maersk Growth, High Sage, and Innovation Endeavors also participated in the round, bringing the company’s total funding to $148 million.
“Food, more so than anything else, shapes the health of people and our planet. We founded Afresh with the purpose of eliminating food waste and making nutritious food more accessible. We’re thrilled to use this capital to expand the scale and scope of our Fresh Operating System,” says Matt Schwartz, co-founder and CEO of Afresh.

Afresh will use the investment to scale across thousands more stores and expand the footprint of its Fresh Operating System, an efficient, flexible solution for forecasting, inventory, ordering, and store operations, to support new fresh categories like meat and bakery. The funding will also be used to grow Afresh’s team and expand internationally to Europe.

Aiming to serve 10% of U.S. grocery stores by the end of 2022, Afresh tripled its customer base in 2021, signing regional chains like CUB and national chains like Albertsons, with plans to roll out to more than 2,300 Albertsons stores by the end of 2022. On average, stores using Afresh reduce food waste by 25% or more. They also see a 2-4% increase in top-line revenue growth and have a 40% or more increase to their produce operating margin.

“The transformative results that Afresh provides are not only seen in grocers’ bottom lines, but also extend to the impact on our planet through the reduction of food waste,” said Will Reed, General Partner at Spark Capital. “We’re proud to support Afresh through their next stage of growth as they continue on their mission to curb climate change and improve our ability to feed the world in healthy ways.”

Afresh’s mission is to eliminate fresh food waste and increase access for all. Food waste is an enormous problem in the U.S. and worldwide, and studies have shown that about 40% of all food in the U.S. is thrown away. Project Drawdown cites reducing food waste as the number one lever to curb climate change. Afresh is on track to help retailers save 34 million pounds of food waste by the end of 2022.

“Afresh is building a tool for the modern age that not only helps grocers manage fresh categories more effectively but also cuts down on food waste at the retail level, which amounts to 30-35% wasted annually,” said Robb. “Additionally, I was impressed by how closely Afresh partners with store teams to ensure its technology is not only easy but empowering to use, effectively enabling grocers to serve the freshest food to their customers.”

Island Pacific Introduces Its New CFO: Mr. Herman S. Chiu

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Island Pacific is pleased to introduce Mr. Herman Chiu, who will be the newest member of its executive team and will take on the role of Chief Financial Officer (CFO) of the company. Herman brings in more than 30 years of finance executive experience to the organization. After graduating from UCLA in 1989, he started his career by working as Supervising Senior at KPMG, the largest public accounting firm at that time.
After 4 years at KPMG, Herman took on a dual role of VP of Finance and VP of Technology at Harbor Distributing LLC, which is part of the largest conglomerate of beer distributorship in the United States. While in Harbor Distributing from 1993 to 2001, he streamlined and improved the efficiency of monthly financial reporting and was responsible for the vast network and information reporting systems for all related organizations across the country.

In Year 2002, Herman took the role of CFO at Santa Monica Seafood which is a multi-state manufacturer of seafood products and is a premier seafood distributor in the southwest United States. As CFO, he executed the company’s financial strategy which resulted in the company’s growth from $35M to $500M in revenue. Herman assembled a top-notch accounting department which resulted in timely preparation of monthly internal financial statement and annual CPA Audited Financial Statement. He transformed the organization into a goal-oriented company by orchestrating detailed budgets and forecasts to improve performance and profitability. Herman also successfully centralized the banking function and leveraged technology to prevent fraud and improve the reconciliation process of Santa Monica Seafood. His accomplishment resulted in him being awarded the 2017 LA Business Journal CFO of the Year for Large Private Company.

After 17 years as CFO at Santa Monica Seafood, Herman joined Tawa Supermarkets which operates the 99 Ranch Supermarket Chain, the largest Asian Supermarket chain in the United States. Herman was brought in to assist the CEO given Tawa’s complex organization and business structure with multiple business units having varied operational objectives. Herman was an integral part of the executive team given his vast experience in finance, accounting, taxation, corporate governance, and risk management.

Island Pacific is thrilled to have Herman Chiu support our mission of promoting Filipino Food and Culture to the rest of the world. His more than 3 decades of Executive Leadership experience in various field of finance and accounting is what Island Pacific needs to bring the company to the next level.

Natural Grocers by Vitamin Cottage Announces Third Quarter Fiscal 2022 Results

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Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) announced results for its third quarter of fiscal 2022 ended June 30, 2022 and refined its outlook for fiscal 2022.

Highlights for Third Quarter Fiscal 2022 Compared to Third Quarter Fiscal 2021
  • Net sales increased 3.0% to $266.3 million;
  • Daily average comparable store sales increased 2.5%;
  • Operating income was $5.7 million;
  • Net income was $3.9 million with diluted earnings per share of $0.17; and
  • Adjusted EBITDA was $13.0 million.

“We are pleased with our results in the third quarter, which were in-line with our expectations,” said Kemper Isely, Co-President. “Consumers continue to be drawn to the quality and value of our offering, along with our convenient shopping experience, making us a leading destination for natural and organic products in our markets.  Since the third quarter of fiscal 2019 our daily average comparable store sales have increased 14.1% and diluted earnings per share have grown 88.9%, underscoring the strength of our differentiated model as well as our emphasis on operational excellence. We remain confident in our fiscal 2022 outlook and continue to focus on driving profitable growth and enhancing shareholder value.”

In addition to presenting the financial results of Natural Grocers by Vitamin Cottage, Inc. and its subsidiaries (collectively, the Company) in conformity with U.S. generally accepted accounting principles (GAAP), the Company is also presenting EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. The reconciliation from GAAP to these non-GAAP financial measures is provided at the end of this earnings release.

Operating Results — Third Quarter Fiscal 2022 Compared to Third Quarter Fiscal 2021

During the third quarte­­r of fiscal 2022, net sales increased $7.7 million, or 3.0%, to $266.3 million, compared to the third quarter of fiscal 2021, due to a $6.4 million increase in comparable store sales and a $2.1 million increase in new store sales, partially offset by a $0.8 million decrease in sales from one store that closed at the beginning of the quarter. Daily average comparable store sales increased 2.5% in the third quarter of fiscal 2022, and was comprised of a 2.7% increase in daily average transaction size, partially offset by a 0.2% decrease in daily average transaction count. The increase in net sales was primarily driven by retail price inflation, our customers’ response to pandemic trends, marketing initiatives, promotional campaigns and increased engagement in our {N}power® customer loyalty program.

Gross profit during the third quarter of fiscal 2022 increased 2.8% to $73.6 million, driven by increased sales volume. Gross profit reflects earnings after product and occupancy expenses. Gross margin decreased 10 basis points to 27.6% during the third quarter of fiscal 2022, compared to the third quarter of fiscal 2021. The decrease in gross margin was primarily driven by lower product margin attributed to higher freight, distribution and shrink expenses, partially offset by store occupancy leverage.

Store expenses during the third quarter of fiscal 2022 increased 5.3% to $60.1 million. Store expenses as a percentage of net sales was 22.6% during the third quarter of fiscal 2022, up from 22.1% in the third quarter of fiscal 2021. The increase in store expenses as a percentage of net sales was primarily driven by higher labor expense as a result of increased wage rates.

Administrative expenses during the third quarter of fiscal 2022 increased 2.6% to $7.5 million. Administrative expenses as a percentage of net sales were 2.8% for each of the third quarters of fiscal 2022 and 2021.

Operating income for the third quarter of fiscal 2022 was $5.7 million, compared to $7.0 million in the third quarter of fiscal 2021. Operating margin during the third quarter of fiscal 2022 decreased to 2.1%, compared to 2.7% in the third quarter of fiscal 2021.

Net income for the third quarter of fiscal 2022 was $3.9 million, or $0.17 diluted earnings per share, compared to net income of $5.0 million, or $0.22 diluted earnings per share for the third quarter of fiscal 2021.

Adjusted EBITDA was $13.0 million in the third quarter of fiscal 2022, compared to $14.6 million in the third quarter of fiscal 2021.

Operating Results — First Nine Months of Fiscal 2022 Compared to First Nine Months of Fiscal 2021

During the first nine months of fiscal 2022, net sales increased $32.6 million, or 4.2%, to $815.4 million, compared to the first nine months of fiscal 2021, due to a $27.6 million increase in comparable store sales and a $5.8 million increase in new store sales, partially offset by a $0.8 million decrease in sales from one store that closed at the beginning of the third quarter of fiscal 2022. Daily average comparable store sales increased 3.5% in the first nine months of fiscal 2022, and was comprised of a 2.0% increase in daily average transaction size and a 1.5% increase in daily average transaction count. The increase in net sales was primarily driven by our customers’ response to pandemic trends, retail price inflation, marketing initiatives, promotional campaigns, and increased engagement in our {N}power® customer loyalty program.

Gross profit during the first nine months of fiscal 2022 increased 5.9% to $229.1 million, primarily driven by increased sales volume. Gross profit reflects earnings after product and occupancy expenses. Gross margin increased 50 basis points to 28.1% during the first nine months of fiscal 2022, compared to the first nine months of fiscal 2021. The increase in gross margin was primarily driven by improved product margin and store occupancy leverage.

Store expenses during the first nine months of fiscal 2022 increased 1.8% to $179.1 million. Store expenses as a percentage of net sales was 22.0% during the first nine months of fiscal 2022, down from 22.5% in the first nine months of fiscal 2021. The reduction in store expenses as a percentage of net sales reflects leverage attributed to higher sales and a more normalized operating environment compared to the prior fiscal year period.

Administrative expenses during the first nine months of fiscal 2022 increased 9.5% to $22.9 million. Administrative expenses as a percentage of net sales was 2.8% during the first nine months of fiscal 2022, up from 2.7% in the first nine months of fiscal 2021.

Operating income for the first nine months of fiscal 2022 was $26.5 million, compared to $19.0 million in the first nine months of fiscal 2021. Operating margin during the first nine months of fiscal 2022 increased to 3.3%, compared to 2.4% in the first nine months of fiscal 2021.

Net income for the first nine months of fiscal 2022 was $19.2 million, or $0.84 diluted earnings per share, compared to net income of $13.4 million, or $0.59 diluted earnings per share for the first nine months of fiscal 2021.

Adjusted EBITDA was $48.6 million in the first nine months of fiscal 2022, compared to $42.5 million in the first nine months of fiscal 2021.

Balance Sheet and Cash Flow

As of June 30, 2022, the Company had $19.9 million in cash and cash equivalents, no outstanding borrowings on its $50.0 million revolving credit facility, and $17.7 million outstanding on its term loan facility.

During the first nine months of fiscal 2022, the Company generated $29.5 million in cash from operations and invested $18.0 million in net capital expenditures, primarily for new and relocated/remodeled stores.

Dividend Announcement

Today, the Company announced the declaration of a quarterly cash dividend of $0.10 per common share. The dividend will be paid on September 14, 2022 to stockholders of record at the close of business on August 29, 2022.

Growth and Development

During the third quarter of fiscal 2022 the Company opened one new store in Colorado, ending the quarter with 162 stores in 20 states. Since June 30, 2022, the Company opened one new store in South Dakota. As of August 4, 2022, the Company has signed leases for an additional five new stores planned to open in fiscal years 2022 and beyond.

Fiscal 2022 Outlook

The Company is refining its fiscal 2022 new store openings, comparable store sales and earnings per share outlook based upon year-to-date performance and current trends, as well as the uncertainty of the pandemic, and economic and inflationary factors. The Company now expects:

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 fact are forward-looking statements. Actual results could differ materially from those described in the forward-looking statements because of factors such as risks and challenges related to the pandemic and government mandates, the economy, inflationary and deflationary trends, periods of recession, changes in the Company’s industry, business strategy, goals and expectations concerning the Company’s market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, future growth, the war in Ukraine, other financial and operating information and other risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (the Form 10-K) and the Company’s 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, except as may be required by the securities laws.

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

Retail Roundup: Q2 2022 – Latest Retail Report Shows Buyers Are Embracing Changes

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While 2022 started with the pandemic primarily behind us, new challenges have emerged that again challenge retail buyers of consumer-packaged goods. Supply chain issues were the focus of Q2, along with the emergence of inflationary pressures. Health and healthier food categories sit beside convenience foods on the most searched lists in Q2, along with an unsurprising second quarter of top searches for pet food, CBD, and the seasonal re-emergence of sun protection and cooling.

Online retail product discovery and purchasing platform RangeMe analyzes user data from more than 15,000 retail buyers and around 200,000 suppliers to help report the latest trends. Results from its Retail Roundup: Q2 2022 report show that buyers are taking trends seriously and are planning ahead, having learned from supply chain issues and forthcoming inflation costs.

Searches in Q2 imply that consumer health trends are being heard by retailers. “Mushroom” was one of the top searches in Q2 as it’s not only a tasty product used in increasing amounts of plant-based products, but mushrooms offer many health benefits as consumers continue to prioritize health. Across the U.S. and Europe other healthier food alternatives made the list, including retail buyer searches for salad dressing, pickles, okra, and dried chickpeas.

An increase in pet ownership over the course of the pandemic has led to growing demand for quality pet food and products, which is why “Cat Food” has made it on the top searches list. The lack of ingredients, packaging materials, and supply chain transportation issues, all led to a cat food shortage that impacted cat owners and the retailers they buy from in Q2. Wet cat food, especially, was difficult to find due to an aluminum shortage.

Continuing the health trend searches for “Organic Skincare” have seen an increase along with an increase in “CBD” related products in the U.S. in particular. As we see the return of summer the usual searches for sun protection products like “Sunscreen” make the list again. On RangeMe alone, there are more than 1,130 brands selling more than 2,000 sunscreen products. Whether you’re looking for a zinc-based, reef-safe spray, dermatologist-tested lotion, or tinted powder, the selection of SPF products is endless. There are even a few options for our furry friends.

“We’re not going to sugarcoat it, 2022 has been another whirlwind of a year for the consumer packaged goods industry. Ongoing supply chain issues and rising inflation costs have kept suppliers and retail buyers on their toes, said Nicky Jackson, CEO of RangeMe. “This is why it’s more important than ever to stay on top of emerging trends happening within the industry, to better equip your business for success through current circumstances, and we’re happy we can provide insights to help.”

What is perhaps more exciting to see again in Q2, as in Q1 of this year, is the continued interest in and increased search for diverse, minority, and LGBTQ-certified businesses as well as the most popular buyer Collection this quarter, sustainability. Retailers left and right are implementing sustainability initiatives and declaring war on plastic and harmful ingredients by banning them from their stores completely. And on the brand side, sustainable products are beating their less eco-friendly competitors onto retail shelves time and time again.

More than 90% of Gen X consumers are willing to pay more for sustainable products, up 42% from 2019. Above all, consumers are giving their trust (and money) to retailers who are transparent about their efforts and moving in the right direction when it comes to sustainability.

RangeMe is the global industry standard tool for retail product discovery, sourcing, and purchasing. Suppliers can showcase their range, bring new products to market, increase brand visibility, and grow sales, while buyers use RangeMe to discover new products, search trends, purchase directly from the platform and communicate directly with brands.

Fullscript Appoints New Members to its Board of Directors

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Fullscript, the leading care delivery platform for integrative medicine, has appointed Ninan Chacko, chief executive officer of Monotype, and Solmaz Shahalizadeh, founding partner of Backbone Angels, to the company’s board of directors. As the first independent board members to join Fullscript, these two highly experienced leaders offer a wealth of knowledge and a dynamic background to advance the organization’s growth strategy. This brings the total number of Fullscript board members to eight.
“It’s an honour to have Ninan and Solmaz on our board,” said Kyle Braatz, chief executive officer of Fullscript. “We were looking for individuals who had diverse perspectives, great leadership abilities, strong data and software experience, and vast knowledge of business development to strengthen our growth initiatives. We’ve more than succeeded in reaching these criteria.”

Ninan has more than 20 years of global technology leadership experience. He has held executive positions at Travel Leaders Group, one of the largest retail, corporate, and entertainment travel companies in North America and the UK, along with PR Newswire, and Worldspan. Ninan brings his experience in digital acceleration and revenue generation to Fullscript.

“I am delighted to join Kyle and the talented team at Fullscript as they pioneer this innovative approach to integrative medicine,” Ninan said. “I look forward to working with my board colleagues and the management team, drawing on my background in global technology leadership and strategic operations to support Fullscript’s business goals.”

As an executive, investor, and advisor in the technology and data space, Solmaz is well-versed in building companies and scaling businesses. She previously spent more than eight years as vice president and head of data at Shopify, building their entire portfolio of data and machine learning products, and overseeing a team of more than 500. Her extensive career also includes previous positions at Morgan Stanley and McGill University.

“Throughout my career, I have used technology to solve challenging problems and create new opportunities across multiple industries including healthcare and commerce,” Solmaz said. “I’m thrilled to join Kyle and the Fullscript team and support them in their mission as they scale integrative medicine for everyone and tap into the power of data and machine learning to make it a reality.”

Vital Nutrients Launches First-to-Market Vegan Omega with SPMs

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Vital Nutrients, a practitioner-founded nutritional supplement company dedicated to making a positive impact on the health of people and the planet, announc­ed the launch of its latest innovative formulation, Ultra Pure® Vegan Omega SPM+. This high-performance vegan fish oil alternative provides the most biologically active form of specialized pro-resolving mediators (SPMs), plus 400 mg of triglyceride from omega-3s from sustainably sourced, plant-based algal oil concentrate in mini vegan soft gels.
This innovative formulation addresses the increasing demand for vegan alternatives to marine fish oil to support healthy immune responses, cardiovascular health, and cognitive focus. Vital Nutrients holds the exclusive position on this form of algal-based triglyceride DHA/DPA-derived specialized pro-resolving mediators (SPMs), for better tolerance and absorption, and SPMs specific to DHA + DPA. This is the first and only plant-based combination of omega-3 fatty acids with clinically relevant levels of active SPMs that may facilitate the resolution of inflammatory processes more effectively and up to 5x more than omega-3s can alone.*

“In collaboration with our healthcare practitioners, we identified a critical need in the marketplace for a vegan-friendly SPM solution, as well as smaller omega-3 capsules for increased compliance among the general patient population,” explains John P. Troup, Ph.D., Chief Science & Education Officer, Vital Nutrients. “Our new Vegan Omega SPM+ delivers a first of its kind vegan algae omega formulation, in a capsule that is 40% smaller than traditional fish oils for improved patient compliance.”

According to the CDC, up to 80% of Americans have an omega-3 nutrient gap and deficiency in the essential omega-3 fatty acid DHA. In addition, veganism in the United States has increased 6X since 2014.[i] Traditional fish-oil-derived omega-3 supplements lack clinically relevant levels of SPMs and are not a suitable option for a growing portion of the population following a vegan lifestyle.

In accordance with Vital Nutrients’ commitment to clean supplements, Ultra Pure® Vegan Omega SPM+ is free of gluten, dairy, soy, peanut, tree nut, fish and egg, and contains no artificial flavours, or colours, sweeteners, coatings or binders. The product is non-GMO and free of heavy metals, solvents and pesticides.

Each ingredient in the formula has been hand-selected to provide unique benefits, resulting in a balanced, well-rounded combination of scientifically validated ingredients including:

0.1% DHA/DPA-derived SPMs

Activation and support of healthy immune system responses*
SPMs specific to DHA and DPA offer more precise activation*
390 MG DHA

Supports healthy immune system responses and cardiovascular health maintenance*
Supports Central Nervous System function and healthy cognitive performance*
75 MG DPA[ii] [iii]

Structurally similar to DHA and EPA, the inclusion of DPA provides a full-spectrum omega profile
Provides enhanced support for healthy platelet activity, lipid metabolism and cardiovascular system health*
Can be retro-converted to DHA and EPA
1 MG ASTAXANTHIN

High antioxidant characteristics help protect the delicate omega-3 oils within each softgel
Ultra Pure® Vegan Omega SPM+ is the latest vegan-friendly innovation from Vital Nutrients. More than 70% of Vital Nutrients’ complete line of clean nutritional supplements is vegan-friendly, including new Vegan Pancreatic Enzymes, formulated to promote complete digestion across a broader pH range than animal enzymes.

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