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Gross profit during the second quarter of fiscal 2025 increased $11.4 million, or 12.6%, to $101.7 million, compared to $90.4 million in the second quarter of fiscal 2024. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased 100 basis points to 30.3% during the second quarter of fiscal 2025, compared to 29.3% in the second quarter of fiscal 2024. The increase in gross margin was driven by higher product margin primarily attributed to effective promotions.

Store expenses during the second quarter of fiscal 2025 increased 5.1% to $72.8 million, primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 21.7% during the second quarter of fiscal 2025, down from 22.5% in the second quarter of fiscal 2024. The decrease in store expenses as a percentage of net sales reflects expense leverage.

Administrative expenses during the second quarter of fiscal 2025 increased 15.8% to $11.0 million, driven by higher compensation expenses and technology expenses. Administrative expenses as a percentage of net sales were 3.3% in the second quarter of fiscal 2025, up from 3.1% in the second quarter of fiscal 2024.

Operating income for the second quarter of fiscal 2025 increased 55.9% to $17.6 million. Operating margin during the second quarter of fiscal 2025 was 5.2%, up from 3.7% in the second quarter of fiscal 2024.

Net income for the second quarter of fiscal 2025 was $13.1 million, or $0.56 diluted earnings per share, compared to net income of $8.0 million, or $0.35 diluted earnings per share, for the second quarter of fiscal 2024.

Adjusted EBITDA for the second quarter of fiscal 2025 was $26.3 million, compared to $19.7 million in the second quarter of fiscal 2024.

Operating Results — First Six Months Fiscal 2025 Compared to First Six Months Fiscal 2024

During the first six months of fiscal 2025, net sales increased $56.1 million, or 9.2%, to $666.0 million, compared to the first six months of fiscal 2024, due to a $53.8 million increase in comparable store sales and a $6.4 million increase in new store sales, partially offset by a $4.1 million decrease in sales related to closed stores. Daily average comparable store sales increased 8.9% in the first six months of fiscal 2025, comprised of a 5.6% increase in daily average transaction count and a 3.1% increase in daily average transaction size.

Gross profit during the first six months of fiscal 2025 increased $21.5 million, or 12.0%, to $200.6 million, compared to $179.1 million in the first six months of fiscal 2024. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 30.1% during the first six months of fiscal 2025, compared to 29.4% in the first six months of fiscal 2024. The increase in gross margin was driven by higher product margin primarily attributed to effective promotions, and store occupancy cost leverage.

Store expenses during the first six months of fiscal 2025 increased 6.6% to $146.3 million, primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 22.0% during the first six months of fiscal 2025, down from 22.5% in the first six months of fiscal 2024. The decrease in store expenses as a percentage of net sales reflects expense leverage.

Administrative expenses during the first six months of fiscal 2025 increased 19.1% to $22.5 million, driven by higher compensation expenses and technology expenses. Administrative expenses as a percentage of net sales were 3.4% during the first six months of fiscal 2025, up from 3.1% in the first six months of fiscal 2024.

Operating income for the first six months of fiscal 2025 increased 40.1% to $30.9 million. Operating margin during the first six months of fiscal 2025 was 4.6%, compared to 3.6% in the first six months of fiscal 2024.

Net income for the first six months of fiscal 2025 was $23.0 million, or $0.99 diluted earnings per share, compared to net income of $15.7 million, or $0.68 diluted earnings per share, for the first six months of fiscal 2024.

Adjusted EBITDA for the first six months of fiscal 2025 was $49.1 million, compared to $38.5 million in the first six months of fiscal 2024.

Balance Sheet and Cash Flow

As of March 31, 2025, the Company had $21.2 million in cash and cash equivalents, and no outstanding borrowings on its $72.5 million revolving credit facility.

During the first six months of fiscal 2025, the Company generated $36.7 million in cash from operations and invested $15.9 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 $0.12 per common share. The dividend will be paid on June 11, 2025 to stockholders of record at the close of business on May 27, 2025.

Growth and Development

During the second quarter of fiscal 2025, the Company opened two new stores. The Company ended the second quarter with 169 stores in 21 states.

Fiscal 2025 Outlook

The Company is raising its fiscal 2025 outlook for daily average comparable store sales growth and diluted earnings per share, and updating its outlook for new stores. The Company expects:

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) or 1-412-902-4289 (International). The conference ID is "Natural Grocers Q2 FY 2025 Earnings Call." A simultaneous audio webcast will be available at http://Investors.NaturalGrocers.com and archived for a minimum of 20 days.

About Natural Grocers by Vitamin Cottage

Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) is an expanding specialty retailer of natural and organic groceries, body care products and dietary supplements. The grocery products sold by Natural Grocers must meet strict quality guidelines and may not contain artificial flavors, preservatives, or sweeteners (as defined in its standards), synthetic colors, or partially hydrogenated or hydrogenated oils. The Company sells only USDA certified organic produce and exclusively pasture-raised, non-confinement dairy products, and free-range eggs. Natural Grocers' flexible smaller-store format allows it to offer affordable prices in a shopper-friendly, clean and convenient retail environment. The Company also provides extensive free science-based nutrition education programs to help customers make informed health and nutrition choices. The Company, founded in 1955, has 169 stores in 21 states.

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 management's current expectations and are subject to uncertainty and changes in circumstances. All statements that are not statements of historical fact are forward-looking statements. Actual results could differ materially from these expectations due to changes in global, national, regional or local political, economic, inflationary, deflationary, recessionary, business, interest rate, labor market, competitive, market, regulatory, trade policy and other factors, and other risks detailed in the Company's Annual Report on 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 publicly 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

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 costs, share-based compensation, amortization of software hosting arrangement (SaaS) implementation costs and non-recurring items.

The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands:

EBITDA increased 34.2% to $25.4 million for the three months ended March 31, 2025 compared to $19.0 million for the three months ended March 31, 2024. EBITDA increased 25.6% to $46.7 million for the six months ended March 31, 2025 compared to $37.2 million for the six months ended March 31, 2024. EBITDA as a percentage of net sales was 7.6% and 6.2% for the three months ended March 31, 2025 and 2024, respectively. EBITDA as a percentage of net sales was 7.0% and 6.1% for the six months ended March 31, 2025 and 2024, respectively.

Adjusted EBITDA increased 33.3% to $26.3 million for the three months ended March 31, 2025 compared to $19.7 million for the three months ended March 31, 2024. Adjusted EBITDA increased 27.6% to $49.1 million for the six months ended March 31, 2025 compared to $38.5 million for the six months ended March 31, 2024. Adjusted EBITDA as a percentage of net sales was 7.8% and 6.4% for the three months ended March 31, 2025 and 2024, respectively. Adjusted EBITDA as a percentage of net sales was 7.4% and 6.3% for the six months ended March 31, 2025 and 2024, respectively.

Management believes some investors' understanding of our performance is enhanced by including EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe EBITDA and Adjusted EBITDA provide additional information about: (i) our operating performance, because they assist us in comparing the operating performance of our stores on a consistent basis, as they remove the impact of non-cash depreciation and amortization expense as well as items not directly resulting from our core operations, such as interest expense and income taxes and (ii) our performance and the effectiveness of our operational strategies. Additionally, EBITDA is a component of a measure in our financial covenants under our credit facility.

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

Our competitors may define EBITDA and Adjusted EBITDA differently, and as a result, our measures of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA of other companies. Items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do 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 and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:

• EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA and Adjusted EBITDA do not reflect any depreciation or interest expense for leases classified as finance leases;

• EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

• Adjusted EBITDA does not reflect share-based compensation, impairment of long-lived assets, store closing costs and amortization of SaaS implementation costs;

• EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA as supplemental information.

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