10-Q 1 imkt-20220326x10q.htm 10-Q imkt-20220326x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

x        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 26, 2022

 

¨         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                  to                 

 

Commission file number 0-14706.

 

 

 

INGLES MARKETS, INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

North Carolina

 

56-0846267

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

P.O. Box 6676, Asheville NC

 

28816

(Address of principal executive offices)

 

(Zip Code)

 

(828) 669-2941

Registrant’s telephone number, including area code

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $0.05 par value per share

IMKTA

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x    No ¨.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x

Accelerated Filer ¨

Non-Accelerated Filer ¨

Smaller Reporting Company ¨

Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x.

As of May 2, 2022, the Registrant had 14,355,235 shares of Class A Common Stock, $0.05 par value per share, outstanding and 4,639,141 shares of Class B Common Stock, $0.05 par value per share, outstanding.

 


1


 

INGLES MARKETS, INCORPORATED

 

INDEX

 

 

  

Page

No.

 

Part I – Financial Information

  

 

    Item 1. Financial Statements (Unaudited)

  

 

Condensed Consolidated Balance Sheets as of March 26, 2022 and September 25, 2021

  

3

Condensed Consolidated Statements of Income and Comprehensive Income for the

  

Three Months Ended March 26, 2022 and March 27, 2021

4

Six Months Ended March 26, 2022 and March 27, 2021

5

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Six Months Ended March 26, 2022 and March 27, 2021

  

6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 26, 2022 and March 27, 2021

  

7

Notes to Unaudited Interim Financial Statements

  

8

    Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

14

    Item 3. Quantitative and Qualitative Disclosures About Market Risk

  

22

Item 4. Controls and Procedures

22

Part II – Other Information

  

    Item 6. Exhibits

  

23

Signatures

  

24


2


Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

 

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 26,

September 25,

2022

2021

ASSETS

Current Assets:

Cash and cash equivalents

$

65,624,291

$

70,313,350

Short term investments

115,007,106

5,000,000

Receivables - net

98,010,655

95,082,014

Inventories

397,891,256

389,953,456

Other current assets

24,906,417

15,091,595

Total Current Assets

701,439,725

575,440,415

Property and Equipment - Net

1,343,410,698

1,370,769,432

Operating lease right of use assets

41,667,691

40,145,098

Other Assets

37,658,397

31,989,010

Total Assets

$

2,124,176,511

$

2,018,343,955

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of long-term debt

$

17,618,760

$

17,600,739

Current portion of operating lease liabilities

8,395,245

8,635,998

Accounts payable - trade

188,102,503

189,432,027

Accrued expenses and current portion of other long-term liabilities

73,872,036

90,428,567

Total Current Liabilities

287,988,544

306,097,331

Deferred Income Taxes

73,964,000

72,768,000

Long-Term Debt

560,832,573

571,913,204

Noncurrent operating lease liabilities

35,461,720

33,887,935

Other Long-Term Liabilities

45,078,425

50,418,947

Total Liabilities

1,003,325,262

1,035,085,417

Stockholders’ Equity

Preferred stock, $0.05 par value; 10,000,000 shares authorized; no shares issued

Common stocks:

Class A, $0.05 par value; 150,000,000 shares authorized;
14,325,235 shares issued and outstanding March 26, 2022;
14,271,335 shares issued and outstanding at September 25, 2021

716,262

713,567

Class B, convertible to Class A, $0.05 par value;
100,000,000 shares authorized;
4,669,141 shares issued and outstanding March 26, 2022;
4,723,041 shares issued and outstanding at September 25, 2021

233,457

236,152

Paid-in capital in excess of par value

Accumulated other comprehensive income

5,463,160

(3,426,140)

Retained earnings

1,114,438,370

985,734,959

Total Stockholders’ Equity

1,120,851,249

983,258,538

Total Liabilities and Stockholders’ Equity

$

2,124,176,511

$

2,018,343,955

See notes to unaudited condensed consolidated financial statements.


3


INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

March 26,

March 27,

2022

2021

Net sales

$

1,377,118,668

$

1,184,554,737

Cost of goods sold

1,028,556,135

874,054,346

Gross profit

348,562,533

310,500,391

Operating and administrative expenses

254,739,175

236,850,173

Gain from sale or disposal of assets

1,265,254

663,278

Income from operations

95,088,612

74,313,496

Other income, net

1,344,269

645,287

Interest expense

5,425,534

6,194,790

Income before income taxes

91,007,347

68,763,993

Income tax expense

22,366,000

16,575,000

Net income

$

68,641,347

$

52,188,993

Other comprehensive income:

Change in fair value of interest rate swap

$

9,896,413

$

6,755,876

Income tax expense

(2,418,000)

(1,650,000)

Other comprehensive income, net of tax

7,478,413

5,105,876

Comprehensive income

$

76,119,760

$

57,294,869

Per share amounts:

Class A Common Stock

Basic earnings per common share

$

3.70

$

2.65

Diluted earnings per common share

$

3.61

$

2.58

Class B Common Stock

Basic earnings per common share

$

3.36

$

2.41

Diluted earnings per common share

$

3.36

$

2.41

Cash dividends per common share

Class A Common Stock

$

0.165

$

0.165

Class B Common Stock

$

0.150

$

0.150

See notes to unaudited condensed consolidated financial statements.


4


INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Six Months Ended

March 26,

March 27,

2022

2021

Net sales

$

2,768,648,179

$

2,374,997,878

Cost of goods sold

2,069,541,379

  

1,750,309,345

Gross profit

699,106,800

624,688,533

Operating and administrative expenses

514,824,580

475,049,250

Gain from sale or disposal of assets

1,209,226

1,114,997

Income from operations

185,491,446

150,754,280

Other income, net

2,936,323

1,337,304

Interest expense

10,839,405

12,595,503

Income before income taxes

177,588,364

139,496,081

Income tax expense

42,758,000

33,483,000

Net income

$

134,830,364

$

106,013,081

Other comprehensive income:

Change in fair value of interest rate swap

$

11,763,300

$

9,519,614 

Income tax expense

(2,874,000)

(2,325,000)

Other comprehensive income, net of tax

8,889,300

7,194,614 

Comprehensive income

$

143,719,664

$

113,207,695

Per share amounts:

Class A Common Stock

Basic earnings per common share

$

7.26

$

5.38

Diluted earnings per common share

$

7.10

$

5.24

Class B Common Stock

Basic earnings per common share

$

6.60

$

4.89

Diluted earnings per common share

$

6.60

$

4.89

Cash dividends per common share

Class A Common Stock

$

0.33

$

0.33

Class B Common Stock

$

0.30

$

0.30

See notes to unaudited condensed consolidated financial statements.


5


INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

 

THREE AND SIX MONTHS ENDED MARCH 26, 2022 AND MARCH 27, 2021

Paid-in

Accumulated

Class A

Class B

Capital in

Other

Common Stock

Common Stock

Excess of

Comprehensive

Retained

  

Shares

  

Amount

Shares

Amount

Par Value

Income (Loss)

  

Earnings

Total

Balance, September 26, 2020

14,212,360 

  

$

710,618 

6,047,416 

$

302,371 

$

12,311,249 

$

(10,251,296)

$

816,258,015 

$

819,330,957 

Net income

53,824,087 

53,824,087 

Other comprehensive income, net of income tax

2,088,738 

2,088,738 

Cash dividends

(3,252,151)

(3,252,151)

Common stock conversions

8,175 

409 

(8,175)

(409)

Balance, December 26, 2020

14,220,535 

$

711,027 

6,039,241 

$

301,962 

$

12,311,249 

$

(8,162,558)

$

866,829,951 

$

871,991,631 

Net income

52,188,993 

52,188,993 

Other comprehensive income, net of income tax

5,105,876 

5,105,876 

Cash dividends

(3,252,276)

(3,252,276)

Stock repurchases, at cost

(1,265,400)

(63,270)

(12,311,249)

(67,624,069)

(79,998,588)

Common stock conversions

32,750 

1,638 

(32,750)

(1,638)

Balance, March 27, 2021

14,253,285 

$

712,665 

4,741,091 

$

237,054 

$

$

(3,056,682)

$

848,142,599 

$

846,035,636 

Balance, September 25, 2021

14,271,335 

  

$

713,567 

4,723,041 

$

236,152 

$

$

(3,426,140)

$

985,734,959 

$

983,258,538 

Net income

66,189,018 

66,189,018 

Other comprehensive income, net of income tax

1,410,887 

1,410,887 

Cash dividends

(3,063,227)

(3,063,227)

Common stock conversions

33,300 

1,665 

(33,300)

(1,665)

Balance, December 25, 2021

14,304,635 

$

715,232 

4,689,741 

$

234,487 

$

$

(2,015,253)

$

1,048,860,750 

$

1,047,795,216 

Net income