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Ingles Markets, Incorporated Reports Results for Third Quarter and First Nine Months of Fiscal 2021

Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported increased sales and net income for the three and nine months ended June 26, 2021.

The coronavirus (COVID-19) pandemic was declared a national emergency on March 13, 2020. The pandemic has had a significant impact on the Company’s operations since then. At this time the Company cannot predict the impact of the pandemic on future periods.

Robert P. Ingle II, Chairman of the Board, stated, “We continue to respond well to ongoing challenges with labor supply as well as some disruptions to product availability and distribution. We appreciate the hard work and dedication of our associates to maintain high levels of customer service in the face of these challenges.”

Third Quarter Results

Net sales totaled $1.28 billion for the quarter ended June 26, 2021, an increase of 7.4% compared with $1.19 billion for the quarter ended June 27, 2020.

Gross profit for the June 2021 quarter totaled $337.5 million, or 26.4% of sales. Gross profit for the June 2020 quarter was $324.7 million, or 27.3% of sales.

Operating and administrative expenses for the June 2021 quarter totaled $239.4 million compared with $234.6 million for the June 2020 quarter. Most of the increase was due to higher costs incurred to support increased sales.

Interest expense totaled $5.5 million for the three-month period ended June 26, 2021, compared with $9.7 million for the three-month period ended June 27, 2020. In June 2021, the Company issued $350 million of 4.00% Senior Notes due in 2031. Proceeds were used to redeem in July 2021 the remaining $295 million of 5.75% Senior Notes due in 2023. The Company continues to reduce higher rate debt and has refinanced debt at lower rates over the past twelve months.

Net income totaled $72.0 million for the three-month period ended June 26, 2021, compared with $62.8 million for the three-month period ended June 27, 2020. Basic and diluted earnings per share for Class A Common Stock were $3.88 and $3.79, respectively, for the quarter ended June 26, 2021, compared with $3.18 and $3.10, respectively, for the quarter ended June 27, 2020. Basic and diluted earnings per share for Class B Common Stock were each $3.52 for the quarter ended June 26, 2021, and $2.89 for the quarter ended June 27, 2020.

Nine Month Results

Net sales totaled $3.65 billion for the nine months ended June 26, 2021, an increase of 7.0% compared with $3.41 billion for the nine months ended June 27, 2020.

Gross profit for the nine months ended June 26, 2021, totaled $962.2 million, or 26.3% of sales. Gross profit for the nine months ended June 27, 2020, totaled $873.8 million, or 25.6% of sales.

Operating and administrative expenses totaled $714.5 million for the nine months ended June 26, 2021, and $685.0 million for the nine months ended June 27, 2020. Increased labor and other pandemic-related costs accounted for most of the increase.

Interest expense decreased to $18.1 million for the nine-month period ended June 26, 2021, compared with $31.8 million for the nine-month period ended June 27, 2020. Over the past twelve months the Company has reduced or refinanced higher rate debt. Market interest rates have also decreased, reducing the cost of some of the Company’s debt.

Net income totaled $178.0 million for the nine-month period ended June 26, 2021, compared with $120.7 million for the nine-month period ended June 27, 2020. Basic and diluted earnings per share for Class A Common Stock were $9.22 and $8.98, respectively, for the nine months ended June 26, 2021, compared with $6.13 and $5.96, respectively, for the nine months ended June 27, 2020. Basic and diluted earnings per share for Class B Common Stock were each $8.38 for the nine months ended June 26, 2021, compared with $5.57 of basic and diluted earnings per share for the nine months ended June 27, 2020.

Capital expenditures for the June 2021 nine-month period totaled $108.0 million, compared with $78.9 million for the June 2020 nine-month period. Capital expenditures are focused on stores that have already opened this fiscal year as well as stores scheduled to open later. The Company also continues to make ongoing improvements to the existing store base. Capital expenditures for the entire fiscal year are expected to be approximately $120 million to $140 million.

The Company currently has full availability under its $150.0 million line of credit. The Company believes its financial resources, including the line of credit and other internal and anticipated external sources of funds, will be sufficient to meet planned capital expenditures, debt service and working capital requirements for the foreseeable future.

Ingles continues to provide additional pandemic support to its communities, including increased donations to local food banks and purchases from local vendors.

The comments in this press release contain certain forward-looking statements. Ingles undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. Ingles’ actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, Ingles. Factors that may affect results include changes in business and economic conditions generally in Ingles’ operating area, pricing pressures, increased competitive efforts by others in Ingles’ marketing areas and the availability of financing for capital improvements. A more detailed discussion of these factors may be found in reports filed by the Company with the Securities and Exchange Commission including its 2020 Form 10-K and 2021 Forms 10-Q.

Ingles Markets, Incorporated is a leading grocer with operations in six southeastern states. Headquartered in Asheville, North Carolina, the Company operates 198 supermarkets. In conjunction with its supermarket operations, the Company operates neighborhood shopping centers, most of which contain an Ingles supermarket. The Company also owns a fluid dairy facility that supplies Ingles supermarkets and unaffiliated customers. To learn more about Ingles Markets visit ingles-markets.com.

INGLES MARKETS, INCORPORATED

(Amounts in thousands except per share data)

 

Unaudited Financial Highlights

Condensed Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

June 26,

June 27,

 

June 26,

June 27,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

Net sales

 

$

1,277,465

$

1,189,600

 

$

3,652,463

$

3,413,437

Gross profit

 

 

337,465

 

324,721

 

 

962,154

 

873,798

Operating and administrative expenses

 

 

239,410

 

234,597

 

 

714,459

 

684,971

Gain from sale or disposal of assets

 

 

2,530

 

1,339

 

 

3,645

 

4,412

Income from operations

 

 

100,585

 

91,463

 

 

251,339

 

193,239

Other income, net

 

 

678

 

626

 

 

2,016

 

1,031

Interest expense

 

 

5,529

 

9,715

 

 

18,125

 

31,848

Loss on early extinguishment of debt

 

 

1,083

----

 

 

1,082

 

3,719

Income tax expense (benefit)

 

 

22,677

 

19,621

 

 

56,160

 

37,970

Net income

 

$

71,974

$

62,753

 

$

177,988

$

120,733

 

 

 

 

 

 

 

Basic earnings per common share – Class A

 

$

3.88

$

3.18

 

$

9.22

$

6.13

Diluted earnings per common share – Class A

 

$

3.79

$

3.10

 

$

8.98

$

5.96

Basic earnings per common share – Class B

 

$

3.52

$

2.89

 

$

8.38

$

5.57

Diluted earnings per common share – Class B

 

$

3.52

$

2.89

 

$

8.38

$

5.57

 

 

 

 

 

 

 

Additional selected information:

 

 

 

 

 

 

Depreciation and amortization expense

 

$

30,704

$

28,956

 

$

90,910

$

86,313

Rent expense

 

$

2,702

$

2,464

 

$

8,380

$

7,431

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

 

 

 

June 26,

 

 

Sept. 26,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

319,470

 

 

$

6,904

 

Receivables-net

 

 

90,176

 

 

 

81,358

 

Inventories

 

 

380,501

 

 

 

366,824

 

Other current assets

 

 

10,251

 

 

 

15,100

 

Property and equipment-net

 

 

1,372,648

 

 

 

1,354,490

 

Other assets

 

 

74,446

 

 

 

74,623

 

TOTAL ASSETS

 

$

2,247,492

 

 

$

1,899,299

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current maturities of long-term debt

 

$

314,534

 

 

$

19,306

 

Accounts payable, accrued expenses and

 

 

 

 

 

current portion of other long-term liabilities

 

271,036

 

 

 

304,507

 

Deferred income taxes

 

 

74,244

 

 

 

73,334

 

Long-term debt

 

 

586,715

 

 

 

586,198

 

Other long-term liabilities

 

 

86,670

 

 

 

96,623

 

Total Liabilities

 

 

1,333,199

 

 

 

1,079,968

 

Stockholders' equity

 

 

914,293

 

 

 

819,331

 

TOTAL LIABILITIES AND

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

$

2,247,492

 

 

$

1,899,299

 

 

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