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Ingles Markets, Incorporated Reports Sales and Net Income for Second Quarter and First Six Months of Fiscal 2020

Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported increased sales and pretax income for the three and six months ended March 28, 2020.

The coronavirus (COVID-19) pandemic was declared a national emergency on March 13, 2020 and the Company was classified as an essential business. 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 are very appreciative of all our store and warehouse associates that have continued to serve our customers during the COVID-19 pandemic. We remain focused on our tremendous obligation to provide food and other products during this unprecedented time."

Second Quarter Results

Second quarter fiscal 2020 net sales totaled $1.14 billion compared with $1.00 billion for the second quarter of fiscal 2019. Retail comparable store sales, excluding gasoline increased 17.5%.

Gross profit for the March 2020 quarter totaled $291.6 million, or 25.5% of sales. Gross profit for the March 2019 quarter was $244.3 million, or 24.4% of sales.

Operating and administrative expenses for the March 2020 quarter totaled $228.4 million, compared with $216.5 million for the March 2019 quarter. Increased labor and personnel costs accounted for most of the increase.

Over the past twelve months, the Company has paid down debt and refinanced certain debt at lower interest rates. Interest expense totaled $10.2 million for the three-month period ended March 28, 2020, and $12.0 million for the three-month period ended March 30, 2019. Total debt at the end of March 2020 was $842.1 million, compared with $857.5 million at the end of March 2019.

The Company’s effective tax rate was 24.4% for the March 2020 quarter, compared with 21.9% for the March 2019 quarter.

Net income totaled $40.3 million for the three-month period ended March 28, 2020, compared with $15.0 million for the three-month period ended March 30, 2019. Basic and diluted earnings per share for Class A Common Stock were $2.04 and $1.99, respectively, for the quarter ended March 28, 2020, compared with $0.76 and $0.74, respectively, for the quarter ended March 30, 2019. Basic and diluted earnings per share for Class B Common Stock were $1.86 for the quarter ended March 28, 2020, and $0.69 for the quarter ended March 30, 2019.

First Half Results

First half fiscal 2020 net sales totaled $2.22 billion, compared with $2.06 billion in the first half of 2019. Retail comparable store sales, excluding the effect of gasoline, increased 9.7%.

Gross profit for the six months ended March 28, 2020, totaled $549.1 million, compared with $502.7 million for the first six months of last fiscal year. Gross profit, as a percentage of sales, was 24.7% for the March 2020 six-month period, compared with 24.4% for the March 2019 six-month period.

Operating and administrative expenses totaled $450.4 million for the six months ended March 28, 2020, and $435.2 million for the six months ended March 30, 2019. Increased labor and personnel costs accounted for most of the increase.

Interest expense decreased to $22.1 million for the six-month period ended March 28, 2020, compared with $24.2 million for the six-month period ended March 30, 2019. During fiscal year 2020, the Company refinanced $155 million of 5.75% debt with ten-year fixed rate secured debt at 2.95%. Debt extinguishment costs of $3.7 million were incurred to complete the transaction.

The Company’s effective tax rate was 24.0% for the first half of fiscal year 2020 quarter, compared with 21.5% for the first half of fiscal year 2019.

Net income totaled $58.0 million for the six-month period ended March 28, 2020, compared with $37.2 million for the six-month period ended March 30, 2019. Basic and diluted earnings per share for Class A Common Stock were $2.94 and $2.86, respectively, for the six months ended March 28, 2020, compared to $1.88 and $1.83, respectively, for the six months ended March 30, 2019. Basic and diluted earnings per share for Class B Common Stock were each $2.68 for the six months ended March 28, 2020, compared with $1.71 of basic and diluted earnings per share for the six months ended March 30, 2019.

Capital expenditures for the March 2020 six-month period totaled $56.8 million, compared with $94.2 million for the March 2019 six-month period. Last year, the Company had increased capital expenditures associated with additional new store construction, store remodeling, and property acquisitions. Total fiscal 2020 capital expenditures are expected to be between $120 million and $160 million.

The Company currently has $165.9 million available under its $175 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.

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 2019 Form 10-K and 2020 Forms 10-Q.

Ingles Markets, Incorporated is a leading supermarket chain 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 Company supermarkets and unaffiliated customers. The Company's Class A Common Stock is traded on The NASDAQ Stock Market's Global Select Market under the symbol IMKTA. For more information, visit Ingles' website at www.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

 

Six Months Ended

 

 

March 28,

 

March 30,

 

March 28,

 

March 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,145,482

 

$

1,001,844

 

$

2,223,837

 

$

2,063,681

Gross profit

 

 

291,588

 

 

244,301

 

 

549,077

 

 

502,711

Operating and administrative expenses

 

 

228,395

 

 

216,466

 

 

450,374

 

 

435,151

Gain from sale or disposal of assets

 

 

108

 

 

2,911

 

 

3,073

 

 

2,650

Income from operations

 

 

63,301

 

 

30,746

 

 

101,776

 

 

70,210

Other income, net

 

 

207

 

 

448

 

 

405

 

 

1,343

Interest expense

 

 

10,184

 

 

11,997

 

 

22,133

 

 

24,209

Loss on early extinguishment of debt

 

----

 

----

 

 

3,719

 

----

Income tax expense (benefit)

 

 

13,032

 

 

4,197

 

 

18,349

 

 

10,192

Net income

 

$

40,292

 

$

15,000

 

$

57,980

 

$

37,152

 

 

 

 

 

 

 

 

 

Basic earnings per common share – Class A

 

$

2.04

 

$

0.76

 

$

2.94

 

$

1.88

Diluted earnings per common share – Class A

 

$

1.99

 

$

0.74

 

$

2.86

 

$

1.83

Basic earnings per common share – Class B

 

$

1.86

 

$

0.69

 

$

2.68

 

$

1.71

Diluted earnings per common share – Class B

 

$

1.86

 

$

0.69

 

$

2.68

 

$

1.71

 

 

 

 

 

 

 

 

 

Additional selected information:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

$

28,993

 

$

27,791

 

$

57,357

 

$

55,607

Rent expense

 

$

2,309

 

$

3,125

 

$

4,967

 

$

6,288

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

March 28,

 

 

 

Sept. 28,

 

 

 

 

2020

 

 

 

2019

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,972

 

 

 

$

42,125

 

 

Receivables-net

 

 

82,273

 

 

 

 

71,951

 

 

Inventories

 

 

315,268

 

 

 

 

374,129

 

 

Other current assets

 

 

13,523

 

 

 

 

8,898

 

 

Property and equipment-net

 

 

1,342,672

 

 

 

 

1,344,267

 

 

Other assets

 

 

65,522

 

 

 

 

25,958

 

 

TOTAL ASSETS

 

$

1,964,230

 

 

 

$

1,867,328

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

38,078

 

 

 

$

12,600

 

 

Accounts payable, accrued expenses and current portion of other long-term liabilities

 

 

256,789

 

 

 

 

234,979

 

 

Deferred income taxes

 

 

73,294

 

 

 

 

75,499

 

 

Long-term debt

 

 

803,977

 

 

 

 

839,638

 

 

Other long-term liabilities

 

 

86,267

 

 

 

 

41,890

 

 

Total Liabilities

 

 

1,258,405

 

 

 

 

1,204,606

 

 

Stockholders' equity

 

 

705,825

 

 

 

 

662,722

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,964,230

 

 

 

$

1,867,328

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200507005126/en/

Contacts

Ron Freeman
Chief Financial Officer
(828) 669-2941 (Ext. 223)