Natural Grocers by Vitamin Cottage Inc

Previous wording

We operate natural and organic grocery and dietary supplement stores that are focused on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach. We offer a variety of natural and organic groceries, dietary supplements and body care products that meet our strict quality standards. We believe we have been at the forefront of the natural and organic foods movement since our founding. We are headquartered in Lakewood, Colorado. As of June 30, 2024, we operated 168 stores in 21 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.

Current wording

We operate natural and organic grocery and dietary supplement stores that are focused on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach. We offer a variety of natural and organic groceries, dietary supplements and body care products that meet our strict quality standards. We believe we have been at the forefront of the natural and organic foods movement since our founding. We are headquartered in Lakewood, Colorado. As of December 31, 2024, we operated 167 stores in 21 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.

Previous wording

The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five fiscal years ended September 30, 2023, we increased our store count at a compound annual growth rate of 2.2%. In fiscal year 2023, we opened three new stores, relocated/remodeled three existing stores and closed two stores. We plan to open four new stores and relocate/remodel five existing stores in fiscal year 2024. During the nine months ended June 30, 2024, we opened three new stores and relocated/remodeled four existing stores. Between July 1, 2024 and the date of this Form 10-Q, we opened one new store and did not relocate/remodel any existing stores.

Current wording

The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five years ended September 30, 2024, we increased our store count at a compound annual growth rate of 2.0%. In fiscal year 2024, we opened four new stores and relocated/remodeled four existing stores. We plan to open four to six new stores and relocate/remodel two to four existing stores in fiscal year 2025. During the three months ended December 31, 2024, we relocated/remodeled two existing stores and closed two stores. Between January 1, 2025 and the date of this Form 10-Q, we opened one new store and did not relocate/remodel any existing stores.

Previous wording

Key highlights of our performance for the three and nine months ended June 30, 2024 are discussed briefly below and in further detail throughout this MD&A. Key financial metrics, including, but not limited to, daily average comparable store sales, are defined in the section “Key Financial Metrics in Our Business,” presented later in this MD&A.

Current wording

Key highlights of our performance for the three months ended December 31, 2024 are discussed briefly below and in further detail throughout this MD&A. Key financial metrics including, but not limited to, daily average comparable store sales, are defined in the section “Key Financial Metrics in Our Business,” presented later in this MD&A.

Previous wording

Our cost of goods sold and occupancy costs include the cost of inventory sold during the period (net of discounts and allowances), shipping and handling costs, distribution and supply chain costs (including the costs of our bulk food repackaging facility), buying costs, shrink expense, third-party delivery fees and store occupancy costs. Store occupancy costs include rent, common area maintenance and real estate taxes. Depreciation expense included in cost of goods sold relates to depreciation of assets directly used at our bulk food repackaging facility. The components of our cost of goods sold and occupancy costs may not be identical to those of our competitors, and, as a result, our cost of goods sold and occupancy costs data included in this Form 10-Q may not be identical to those of our competitors and may not be comparable to similar data made available by our competitors. Occupancy costs as a percentage of net sales typically decrease as new stores mature and sales increase. Rent payments for leases classified as finance lease obligations are not recorded in cost of goods sold and occupancy costs. Rather, these rent payments are recognized as a reduction of the related obligations and as interest expense.

Current wording

Our cost of goods sold and occupancy costs include the cost of inventory sold during the period (net of discounts and allowances), shipping and handling costs, distribution and supply chain costs (including the costs of our bulk food repackaging facility), buying costs, shrink expense, third-party delivery fees and store occupancy costs. Store occupancy costs include rent, common area maintenance and real estate taxes. Depreciation expense included in cost of goods sold relates to depreciation of assets directly used at our bulk food repackaging facility. The components of our cost of goods sold and occupancy costs may not be identical to those of our competitors, and, as a result, our cost of goods sold and occupancy costs data included in this Form 10-Q may not be identical to those of our competitors and may not be comparable to similar data made available by our competitors. Occupancy costs as a percentage of net sales typically decrease as new stores mature and sales increase. Lease payments for leases classified as finance lease obligations are not recorded in cost of goods sold and occupancy costs. Rather, these lease payments are recognized as a reduction of the related obligations and as interest expense.

Previous wording

Store expenses consist of store-level expenses, such as salary and benefits, share-based compensation, supplies, utilities, depreciation, advertising, bank credit card charges and other related costs associated with operations and purchasing support. Depreciation expense included in store expenses relates to depreciation for assets directly used at the stores, including depreciation on land improvements, leasehold improvements, fixtures and equipment and technology. Depreciation expenses on the lease assets related to the finance leases of the stores are also considered store expenses. Additionally, store expenses include any gain or loss recorded on the disposal of fixed assets and lease terminations, primarily related to store relocations, as well as store closing costs. Store expenses also include long-lived asset impairment charges. The majority of store expenses consists of labor-related expenses, which we closely manage and which trend closely with sales. Labor-related expenses as a percentage of net sales tend to be higher at new stores compared to comparable stores, as new stores require a minimum level of staffing in order to maintain adequate levels of customer service combined with lower sales. As new stores increase their sales, labor-related expenses as a percentage of net sales typically decrease.

Current wording

Store expenses consist of store-level expenses, such as salary and benefits, share-based compensation, supplies, utilities, depreciation, advertising, bank credit card charges and other related costs associated with operations and purchasing support. Depreciation expense included in store expenses relates to depreciation for assets directly used at the stores, including depreciation on land improvements, leasehold improvements, fixtures and equipment and technology. Depreciation expenses on the lease assets related to the finance leases of the stores are also considered store expenses. Additionally, store expenses include any gain or loss recorded on the disposal of fixed assets and lease terminations, primarily related to store relocations, as well as store closing costs. Store expenses also include long-lived asset impairment charges. The majority of store expenses consist of labor-related expenses, which we closely manage and which trend closely with sales. Labor-related expenses as a percentage of net sales tend to be higher at new stores compared to comparable stores, as new stores require a minimum level of staffing in order to maintain adequate levels of customer service combined with lower sales. As new stores increase their sales, labor-related expenses as a percentage of net sales typically decrease.

Previous wording

Pre-opening expenses for new stores and relocations/remodels may include rent expense, salaries, advertising, supplies, and other miscellaneous costs incurred prior to the store opening. Rent expense is generally incurred from one to four months prior to a store’s opening date for store leases classified as operating. For store leases classified as finance leases, we recognize pre-opening interest and depreciation expense. Other pre-opening expenses are generally incurred in the 60 days prior to the store opening. Certain advertising and promotional costs associated with opening a new store may be incurred both before and after the store opens. All pre-opening costs are expensed as incurred. Pre-opening expenses for remodels are incurred if the store is required to be closed due to the remodel.

Current wording

Pre-opening expenses for new stores and relocations/remodels may include rent expense, salaries, advertising, supplies, and other miscellaneous costs incurred prior to the store opening. Rent expense is generally incurred from three to six months prior to a store’s opening date for store leases classified as operating. For store leases classified as finance leases, we recognize pre-opening interest and depreciation expense. Other pre-opening expenses are generally incurred in the four to seven months prior to the store opening. Certain advertising and promotional costs associated with opening a new store may be incurred both before and after the store opens. All pre-opening costs are expensed as incurred. Pre-opening expenses for remodels are incurred if the store is required to be closed due to the remodel.

Previous wording

Interest expense consists of the interest associated with finance lease obligations, net of capitalized interest, and our Credit Facility.

Current wording

Interest expense consists of the interest associated with finance lease obligations and our Credit Facility, net of capitalized interest.

Previous wording

Income taxes are accounted for in accordance with the provisions of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Income tax expense also includes excess tax benefits and deficiencies related to the vesting of restricted stock units.

Current wording

Income taxes are accounted for in accordance with the provisions of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Income tax expense also includes excess tax benefits and deficiencies related to the vesting of RSUs.

Previous wording

Net sales increased $27.3 million, or 9.7%, to $309.1 million for the three months ended June 30, 2024 compared to $281.8 million for the three months ended June 30, 2023, due to a $23.6 million increase in comparable store sales and a $5.4 million increase in new store sales, partially offset by a $1.7 million decrease in net sales related to closed stores. Daily average comparable store sales increased 7.2% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The daily average comparable store sales increase resulted from a 4.7% increase in daily average transaction count and a 2.4% increase in daily average transaction size. Comparable store average transaction size was $46.76 for the three months ended June 30, 2024. The increase in net sales during the three months ended June 30, 2024 was driven by increases in transaction counts, items per transaction, retail prices, and new store sales. Marketing initiatives, including {N}power® rewards program offers and market-specific campaigns, enhanced customer engagement, which contributed to sales growth.

Current wording

Net sales increased $28.5 million, or 9.4%, to $330.2 million for the three months ended December 31, 2024 compared to $301.8 million for the three months ended December 31, 2023, due to a $26.7 million increase in comparable store sales and a $2.9 million increase in new store sales, partially offset by a $1.1 million decrease in net sales related to closed stores. Daily average comparable store sales increased 8.9% for the three months ended December 31, 2024 compared to an increase of 6.2% for the three months ended December 31, 2023. The daily average comparable store sales increase in the first quarter of fiscal year 2025 resulted from a 5.3% increase in daily average transaction count and a 3.4% increase in daily average transaction size. Comparable store average transaction size was $48.94 for the three months ended December 31, 2024. The increase in net sales during the three months ended December 31, 2024 was driven by increases in transaction counts, items per transaction, retail prices and new store sales. Sales growth was driven by enhanced customer engagement with our {N}power rewards program, compelling offers, marketing initiatives, and the increased sales ofNatural Grocers brand products.

Previous wording

Gross profit increased $8.9 million, or 11.0%, to $90.3 million for the three months ended June 30, 2024 compared to $81.4 million for the three months ended June 30, 2023. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 29.2% for the three months ended June 30, 2024 compared to 28.9% for the three months ended June 30, 2023. The increase in gross margin during the three months ended June 30, 2024 was driven by store occupancy cost leverage, partially offset by lower product margin attributable to product mix.

Current wording

Gross profit increased $10.1 million, or 11.3%, to $98.8 million for the three months ended December 31, 2024 compared to $88.8 million for the three months ended December 31, 2023. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 29.9% for the three months ended December 31, 2024 compared to 29.4% for the three months ended December 31, 2023. The increase in gross margin during the three months ended December 31, 2024 was primarily driven by store occupancy cost leverage and higher product margin.

Previous wording

Store expenses increased $4.9 million, or 7.9%, to $67.6 million for the three months ended June 30, 2024 compared to $62.6 million for the three months ended June 30, 2023. The increase in store expenses was primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 21.9% and 22.2% for the three months ended June 30, 2024 and 2023, respectively. The decrease in store expenses as a percentage of net sales reflects expense leverage.

Current wording

Store expenses increased $5.5 million, or 8.1%, to $73.5 million for the three months ended December 31, 2024 compared to $68.0 million for the three months ended December 31, 2023. The increase in store expenses was primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 22.3% and 22.5% for the three months ended December 31, 2024 and 2023, respectively. The decrease in store expenses as a percentage of net sales reflects expense leverage.

Previous wording

Administrative expenses increased $0.2 million, or 2.5%, to $9.5 million for the three months ended June 30, 2024 compared to $9.3 million for the three months ended June 30, 2023. The increase in administrative expenses was driven by higher compensation expenses. Administrative expenses as a percentage of net sales were 3.1% and 3.3% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Administrative expenses increased $2.1 million, or 22.4%, to $11.5 million for the three months ended December 31, 2024 compared to $9.4 million for the three months ended December 31, 2023. The increase in administrative expenses was driven by higher compensation expenses, including costs related to our Chief Financial Officer transition, and technology expenses. Administrative expenses as a percentage of net sales were 3.5% and 3.1% for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Pre-opening expenses were $0.4 million for each of the three months ended June 30, 2024 and 2023.

Current wording

Pre-opening expenses were $0.4 million and $0.5 million for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Interest expense, net of capitalized interest, was $1.1 million for the three months ended June 30, 2024 compared to $0.8 million for the three months ended June 30, 2023.

Current wording

Interest expense, net of capitalized interest, was $0.9 million for each of the three months ended December 31, 2024 and 2023.

Previous wording

Income tax expense increased $1.4 million for the three months ended June 30, 2024 to $2.6 million compared to $1.2 million for the three months ended June 30, 2023. The Company’s effective income tax rate was 21.9% and 14.1% for the three months ended June 30, 2024 and 2023, respectively. The increase in the effective income tax rate was primarily attributable to lower food donation deductions recorded during the three months ended June 30, 2024.

Current wording

Income tax expense increased $0.3 million for the three months ended December 31, 2024 to $2.5 million compared to $2.2 million for the three months ended December 31, 2023. The Company’s effective income tax rate was approximately 20.0% and 21.7% for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Net income was $9.2 million, or $0.40 diluted earnings per share, for the three months ended June 30, 2024 compared to $7.1 million, or $0.31 diluted earnings per share, for the three months ended June 30, 2023.

Current wording

Net income was $9.9 million, or $0.43 diluted earnings per share, for the three months ended December 31, 2024 compared to $7.8 million, or $0.34 diluted earnings per share, for the three months ended December 31, 2023.

Previous wording

Our ongoing primary sources of liquidity are cash generated from operations, current balances of cash and cash equivalents and borrowings under our Revolving Facility. Our Credit Facility consists of the $75.0 million Revolving Facility and the fully drawn $35.0 million Term Loan Facility. Our primary uses of cash are for purchases of inventory, operating expenses, capital expenditures predominantly in connection with opening, relocating and remodeling stores, debt service, cash dividends, share repurchases and corporate taxes. As of June 30, 2024, we had $13.9 million in cash and cash equivalents and $56.2 million available for borrowing under our Revolving Facility.

Current wording

Our ongoing primary sources of liquidity are cash generated from operations, current balances of cash and cash equivalents and borrowings under our Credit Facility. Our primary uses of cash are for purchases of inventory, operating expenses, capital expenditures predominantly in connection with opening, relocating and remodeling stores, debt service, cash dividends, share repurchases and corporate taxes. As of December 31, 2024, we had $6.3 million in cash and cash equivalents and $61.4 million available for borrowing under our Credit Facility.

Previous wording

In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of the Company’s common stock. Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate on May 31, 2026. We did not repurchase any shares during the three months ended June 30, 2024. The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. Potential future share repurchases under the share repurchase program could be funded by operating cash flow, excess cash balances or borrowings under our Revolving Facility. The timing and the number of shares repurchased, if any, will be dictated by our capital needs and stock market conditions.

Current wording

In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of the Company’s common stock. Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate on May 31, 2026. We did not repurchase any shares of our common stock during the three months ended December 31, 2024. The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. Potential future share repurchases under the share repurchase program could be funded by operating cash flow, excess cash balances or borrowings under our Credit Facility. The timing and the number of shares repurchased, if any, will be dictated by our capital needs and stock market conditions.

Previous wording

We paid a quarterly cash dividend of $0.10 per share of common stock in each of the first three quarters of fiscal year 2024 and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024. The special cash dividend was funded through available cash and borrowings under our Revolving Facility. On August 7, 2024, our Board approved the payment of a quarterly cash dividend of $0.10 per share of common stock to be paid on September 18, 2024 to stockholders of record as of the close of business on September 3, 2024.

Current wording

We paid a quarterly cash dividend of $0.12 per share of common stock in the three months ended December 31, 2024. On February 5, 2025, our Board approved the payment of a quarterly cash dividend of $0.12 per share of common stock to be paid on March 19, 2025 to stockholders of record as of the close of business on March 3, 2025.

Previous wording

We plan to continue to open new stores and relocate/remodel existing stores in the future, which may require us to borrow additional amounts under the Revolving Facility from time to time. We believe that cash and cash equivalents, together with the cash generated from operations and the borrowing availability under our Revolving Facility, will be sufficient to meet our working capital needs and planned capital expenditures, including capital expenditures related to new store needs, repayment of debt, stock repurchases and dividends for the next 12 months and the foreseeable future. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within days from the related sale.

Current wording

We plan to continue to open new stores and relocate/remodel existing stores in the future, which may require us to borrow additional amounts under the Credit Facility from time to time. We believe that cash and cash equivalents, together with the cash generated from operations and the borrowing availability under our Credit Facility, will be sufficient to meet our working capital needs and planned capital expenditures, including capital expenditures related to new store needs, repayment of debt, stock repurchases and dividends for the next 12 months and the foreseeable future. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within days from the related sale.

Previous wording

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, impairment of long-lived assets and store closures, share-based compensation, and changes in deferred taxes, and the effect of working capital changes. Cash provided by operating activities increased $13.1 million, or 36.3%, to $49.3 million for the nine months ended June 30, 2024 compared to $36.2 million for the nine months ended June 30, 2023. The increase in cash provided by operating activities was due to increases in both cash provided by working capital and net income as adjusted for non-cash items.

Current wording

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, impairment of long-lived assets and store closures, share-based compensation, and changes in deferred taxes, and the effect of changes in operating assets and liabilities. Cash provided by operating activities decreased $13.9 million, or 83.9%, to $2.7 million for the three months ended December 31, 2024 compared to $16.6 million for the three months ended December 31, 2023. The decrease in cash provided by operating activities was the result of a decrease in cash provided by operating assets and liabilities, primarily due to timing of accounts payable payments for goods and services, partially offset by an increase in cash provided by net income as adjusted for non-cash items.

Previous wording

Net cash used in investing activities increased $7.5 million, or 30.9%, to $31.8 million for the nine months ended June 30, 2024 compared to $24.3 million for the nine months ended June 30, 2023. This increase was primarily the result of an increase in property and equipment of $7.8 million, partially offset by a decrease in other intangibles of $0.3 million during the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023, and was attributed to the timing of new store openings, relocations/remodels, and software projects under development.

Current wording

Net cash used in investing activities decreased $2.4 million, or 20.2%, to $9.4 million for the three months ended December 31, 2024 compared to $11.8 million for the three months ended December 31, 2023. This decrease was primarily the result of decreases in acquisitions of property and equipment of $2.1 million and other intangibles of $0.1 million during the three months ended December 31, 2024 compared to the three months ended December 31, 2023, attributed to the timing of new store openings, relocations/remodels, and software projects under development.

Previous wording

We plan to spend approximately $3.2 million to $7.2 million on capital expenditures during the remainder of fiscal year 2024 primarily in connection with expected new store openings and store relocations/remodels.

Current wording

We plan to spend approximately $26.6 million to $34.6 million on capital expenditures during the remainder of fiscal year 2025 primarily in connection with expected new store openings and store relocations/remodels.

Previous wording

Acquisition of property and equipment not yet paid decreased $3.7 million to $2.6 million for the nine months ended June 30, 2024 compared to $6.2 million for the nine months ended June 30, 2023 primarily due to the timing of payments related to new store openings and relocations/remodels.

Current wording

Acquisition of property and equipment not yet paid decreased $4.7 million to $3.8 million for the three months ended December 31, 2024 compared to $8.5 million for the three months ended December 31, 2023 due to the timing of payments related to new store openings and relocations/remodels.

Previous wording

Net cash used in financing activities consists primarily of borrowings and repayments under our Credit Facility and dividends paid to stockholders. Net cash used in financing activities was $21.9 million for the nine months ended June 30, 2024 compared to $15.3 million for the nine months ended June 30, 2023. During the nine months ended June 30, 2024, we paid cash dividends of $29.6 million, including a special cash dividend to stockholders of $22.7 million.

Current wording

Net cash provided by financing activities consists primarily of borrowings and repayments under our Credit Facility and dividends paid to stockholders. Net cash provided by financing activities was $4.2 million for the three months ended December 31, 2024 compared to net cash used of $9.5 million for the three months ended December 31, 2023. During the three months ended December 31, 2023, we paid a special cash dividend to stockholders of $22.7 million.

Previous wording

The revolving commitment amount under the Revolving Facility is $75.0 million, including a $5.0 million sub-limit for standby letters of credit. We borrowed $35.0 million under the Term Loan Facility in December 2020. The operating company is the borrower under the Credit Facility and its obligations under the Credit Facility are guaranteed by the holding company and Vitamin Cottage Two Ltd. Liability Company (VC2). The Credit Facility is secured by a lien on substantially all of the Company’s assets. The Company has the right to borrow, prepay and re-borrow amounts under the Revolving Facility at any time prior to the maturity date without premium or penalty. On November 16, 2023, we amended the Credit Facility to: (i) increase our aggregate revolving commitments from $50.0 million to $75.0 million; (ii) extend the maturity date of the Revolving Facility to November 16, 2028; (iii) permit payment of a one-time cash dividend of up to $25.0 million no later than December 31, 2023; and (iv) increase the Company’s restricted payment capacity by $2.5 million, allowing the Company to repurchase shares of common stock and pay dividends on its common stock in an aggregate amount not to exceed $15.0 million during any fiscal year. The aggregate revolving commitment amount will be automatically and permanently reduced by $2.5 million annually until the Revolving Facility matures on November 16, 2028, unless we have previously exercised our option to reduce the aggregate revolving commitments to a lower amount.

Current wording

The aggregate revolving commitment amount available under the Credit Facility is $72.5 million, including a $5.0 million sub-limit for standby letters of credit. The operating company is the borrower under the Credit Facility, and its obligations under the Credit Facility are guaranteed by the holding company and VC2. The Credit Facility is secured by a lien on substantially all of the Company’s assets. The Company has the right to borrow, prepay and re-borrow revolving amounts under the Credit Facility at any time prior to the maturity date without premium or penalty. On November 16, 2023, we amended the Credit Facility to: (i) increase our aggregate revolving commitments from $50.0 million to $75.0 million; (ii) extend the maturity date of the revolving commitments under the Credit Facility to November 16, 2028; (iii) permit payment of a one-time cash dividend of up to $25.0 million no later than December 31, 2023; and (iv) increase the Company’s restricted payment capacity by $2.5 million, allowing the Company to repurchase shares of common stock and pay dividends on its common stock in an aggregate amount not to exceed $15.0 million during any fiscal year. The aggregate revolving commitment amount is automatically and permanently reduced by $2.5 million on each anniversary date until the Credit Facility matures on November 16, 2028, unless we have previously exercised our option to reduce the aggregate revolving commitments to a lower amount.

Previous wording

Base rate loans under the Credit Facility bear interest at a fluctuating base rate as determined by the lenders’ administrative agent based on the most recent compliance certificate of the operating company and stated at the highest of: (i) the federal funds rate plus 0.50%; (ii) the prime rate; and (iii) Term SOFR plus 1.00%, less the lender spread based upon the Company’s consolidated leverage ratio. Term SOFR loans under the Credit Facility bear interest based on Term SOFR for the interest period plus the lender spread based upon the Company’s consolidated leverage ratio. The unused commitment fee is also based upon the Company’s consolidated leverage ratio. The Company is required to repay principal amounts outstanding under the Term Loan Facility in equal quarterly installments of approximately $0.4 million on the last day of each fiscal quarter, commencing on March 31, 2021 and ending on September 30, 2024. Amounts repaid on the Term Loan Facility may not be reborrowed.

Current wording

Base rate loans under the Credit Facility bear interest at a fluctuating base rate as determined by the lenders’ administrative agent based on the most recent compliance certificate of the operating company and stated at the highest of: (i) the federal funds rate plus 0.50%; (ii) the prime rate; and (iii) Term SOFR plus 1.00%, subject to the applicable interest rate floor, less the lender spread based upon the Company’s consolidated leverage ratio. Term SOFR loans under the Credit Facility bear interest based on Term SOFR for the interest period plus the lender spread based upon the Company’s consolidated leverage ratio. The unused commitment fee is also based upon the Company’s consolidated leverage ratio.

Previous wording

We had $16.6 million and no amounts outstanding under the Revolving Facility as of June 30, 2024 and September 30, 2023, respectively. As of June 30, 2024 and September 30, 2023, we had undrawn, issued and outstanding letters of credit of $2.2 million and $1.5 million, respectively, which were reserved against the amount available for borrowing under the Revolving Facility. We had $56.2 million and $48.5 million available for borrowing under the Revolving Facility as of June 30, 2024 and September 30, 2023, respectively. We had $1.7 million of outstanding borrowings under the fully drawn Term Loan Facility as of June 30, 2024.

Current wording

We had $8.9 million and no revolving loan amounts outstanding under the Credit Facility as of December 31, 2024 and September 30, 2024, respectively. As of December 31, 2024 and September 30, 2024, we had undrawn, issued and outstanding letters of credit of $2.2 million, which were reserved against the amount available for borrowing under the Credit Facility. We had $61.4 million and $72.8 million available for borrowing under the Credit Facility as of December 31, 2024 and September 30, 2024, respectively.