10-Q 1 wmk-20230930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]

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

For the quarterly period ended September 30, 2023

or

[ ]

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 1-5039

WEIS MARKETS, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania

    

24-0755415

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1000 S. Second Street

P. O. Box 471

17801-0471

Sunbury, Pennsylvania

(Zip Code)

(Address of principal executive offices)

Registrant’s telephone number, including area code: (570) 286-4571

Registrant’s web address: www.weismarkets.com

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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]

Securities registered pursuant to section 12(b) of the act:

Title of each class

Trading symbol

Name of exchange on which registered

Common stock, no par value

WMK

New York Stock Exchange

As of November 9, 2023, there were issued and outstanding 26,898,443 shares of the registrant’s common stock.

WEIS MARKETS, INC.

TABLE OF CONTENTS

FORM 10-Q

    

Page

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Comprehensive Income

3

Consolidated Statements of Shareholders’ Equity

4

Consolidated Statements of Cash Flows

5

Notes to Consolidated Financial Statements

6

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

10

Item 3. Quantitative and Qualitative Disclosures about Market Risk

18

Item 4. Controls and Procedures

18

Part II. Other Information

Item 6. Exhibits

19

Signatures

20

Exhibit 31.1 Rule 13a-14(a) Certification – CEO

Exhibit 31.2 Rule 13a-14(a) Certification – CFO

Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350

WEIS MARKETS, INC.

PART I – FINANCIAL INFORMATION

ITEM I – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(unaudited)

(amounts in thousands, except shares)

    

September 30, 2023

    

December 31, 2022

Assets

Current:

Cash and cash equivalents

$

64,291

$

157,997

Marketable securities

219,718

186,419

SERP investment

24,131

22,696

Accounts receivable, net

64,509

50,863

Inventories

303,724

293,274

Prepaid expenses and other current assets

42,617

29,921

Total current assets

718,989

741,170

Property and equipment, net

963,295

970,913

Operating lease right-to-use

181,355

175,952

Goodwill

52,330

52,330

Intangible and other assets, net

18,850

18,785

Total assets

$

1,934,819

$

1,959,150

Liabilities

Current:

Accounts payable

$

144,725

$

206,849

Accrued expenses

37,987

57,431

Operating leases

38,563

43,527

Accrued self-insurance

17,159

19,416

Deferred revenue, net

8,915

11,774

Income taxes payable

6,436

6,354

Total current liabilities

253,786

345,351

Postretirement benefit obligations

26,317

25,270

Accrued self-insurance

23,547

23,712

Operating leases

148,344

142,424

Deferred income taxes

115,938

111,225

Other

8,570

9,334

Total liabilities

576,503

657,316

Shareholders’ Equity

Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued, 26,898,443 shares outstanding

9,949

9,949

Retained earnings

1,505,060

1,449,191

Accumulated other comprehensive income (loss)
(Net of deferred taxes of $2,105 in 2023 and $2,342 in 2022)

(5,836)

(6,449)

1,509,173

1,452,691

Treasury stock at cost, 6,149,364 shares

(150,857)

(150,857)

Total shareholders’ equity

1,358,316

1,301,834

Total liabilities and shareholders’ equity

$

1,934,819

$

1,959,150

See accompanying notes to Consolidated Financial Statements.

1

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

13 Weeks Ended

39 Weeks Ended

(amounts in thousands, except shares and per share amounts)

September 30, 2023

September 24, 2022

September 30, 2023

September 24, 2022

Net sales

$

1,160,306

$

1,150,551

$

3,483,975

$

3,389,853

Cost of sales, including advertising, warehousing and distribution expenses

874,583

862,908

2,613,417

2,516,311

Gross profit on sales

285,723

287,643

870,558

873,542

Operating, general and administrative expenses

256,050

253,985

762,644

750,066

Income from operations

29,673

33,658

107,914

123,476

Investment income (loss) and interest expense

1,409

(1,483)

7,715

(3,394)

Other income (expense)

774

1,214

(1,399)

4,805

Income before provision for income taxes

31,856

33,389

114,230

124,887

Provision for income taxes

8,630

4,731

30,925

28,574

Net income

$

23,226

$

28,658

$

83,305

$

96,313

Weighted-average shares outstanding, basic and diluted

26,898,443

26,898,443

26,898,443

26,898,443

Cash dividends per share

$

0.34

$

0.32

$

1.02

$

0.96

Basic and diluted earnings per share

$

0.86

$

1.07

$

3.10

$

3.58

See accompanying notes to Consolidated Financial Statements.

2

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

13 Weeks Ended

39 Weeks Ended

(amounts in thousands)

September 30, 2023

September 24, 2022

September 30, 2023

September 24, 2022

Net income

$

23,226

$

28,658

$

83,305

$

96,313

Other comprehensive income (loss) by component, net of tax:

Available-for-sale marketable securities

Unrealized holding gains (losses) arising during period
(Net of deferred taxes of $347 and $547, respectively for the thirteen weeks ended, and $237 and $3,370, respectively for the thirty-nine weeks ended)

(962)

(2,023)

613

(9,143)

Other comprehensive income gain (loss), net of tax

(962)

(2,023)

613

(9,143)

Comprehensive income, net of tax

$

22,264

$

26,635

$

83,918

$

87,170

See accompanying notes to Consolidated Financial Statements.

3

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)

Accumulated

(amounts in thousands, except shares)

Other

Total

For the Thirteen Weeks Ended

Common Stock

Retained

Comprehensive

Treasury Stock

Shareholders’

September 30, 2023 and September 24, 2022

Shares

Amount

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at July 1, 2023

    

33,047,807

$

9,949

$

1,490,979

$

(4,874)

6,149,364

$

(150,857)

$

1,345,198

Net income

23,226

23,226

Other comprehensive income (loss), net of tax

(962)

(962)

Dividends paid

(9,145)

(9,145)

Balance at September 30, 2023

33,047,807

$

9,949

$

1,505,060

$

(5,836)

6,149,364

$

(150,857)

$

1,358,316

Balance at June 25, 2022

33,047,807

$

9,949

$

1,409,403

$

(5,433)

6,149,364

$

(150,857)

$

1,263,062

Net income

28,658

28,658

Other comprehensive income (loss), net of tax

(2,023)

(2,023)

Dividends paid

(8,608)

(8,608)

Balance at September 24, 2022

33,047,807

$

9,949

$

1,429,453

$

(7,456)

6,149,364

$

(150,857)

$

1,281,089

Accumulated

(amounts in thousands, except shares)

Other

Total

For the Thirty-Nine Weeks Ended

Common Stock

Retained

Comprehensive

Treasury Stock

Shareholders’

September 30, 2023 and September 24, 2022

Shares

Amount

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at December 31, 2022

    

33,047,807

$

9,949

$

1,449,191

$

(6,449)

6,149,364

$

(150,857)

$

1,301,834

Net income

83,305

83,305

Other comprehensive income (loss), net of tax

613

613

Dividends paid

(27,436)

(27,436)

Balance at September 30, 2023

33,047,807

$

9,949

$

1,505,060

$

(5,836)

6,149,364

$

(150,857)

$

1,358,316

Balance at December 25, 2021

33,047,807

$

9,949

$

1,358,963

$

1,687

6,149,364

$

(150,857)

$

1,219,742

Net income

96,313

96,313

Other comprehensive income (loss), net of tax

(9,143)

(9,143)

Dividends paid

(25,823)

(25,823)

Balance at September 24, 2022

33,047,807

$

9,949

$

1,429,453

$

(7,456)

6,149,364

$

(150,857)

$

1,281,089

See accompanying notes to Consolidated Financial Statements.

4

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

39 Weeks Ended

(amounts in thousands)

September 30, 2023

September 24, 2022

Cash flows from operating activities:

Net income

$

83,305

$

96,313

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization

81,533

77,604

(Gain) loss on disposition of fixed assets

5

(2,481)

Unrealized (gain) loss in value of equity securities

815

1,590

Deferred income taxes

4,476

(1,711)

Unrealized (gain) loss in SERP

(1,222)

6,082

Changes in operating assets and liabilities:

Inventories

(10,450)

(30,499)

Accounts receivable and prepaid expenses

(26,342)

(3,689)

Accounts payable and other liabilities

(89,437)

(9,802)

Income taxes

81

9,248

Other

359

(344)

Net cash provided by operating activities

43,125

142,311

Cash flows from investing activities:

Purchase of property and equipment

(75,645)

(83,335)

Proceeds from the sale of property and equipment

336

6,710

Purchase of marketable securities

(92,569)

(267,106)

Proceeds from the sale and maturities of marketable securities

58,725

287,124

Purchase of intangible assets

(29)

(944)

Proceeds from sale of intangible assets

125

Change in SERP investment

(213)

(507)

Net cash used in investing activities

(109,394)

(57,933)

Cash flows from financing activities:

Dividends paid

(27,436)

(25,823)

Net cash used in financing activities

(27,436)

(25,823)

Net increase (decrease) in cash and cash equivalents

(93,706)

58,555

Cash and cash equivalents at beginning of year

157,997

86,048

Cash and cash equivalents at end of period

$

64,291

$

144,603

See accompanying notes to Consolidated Financial Statements. In the first thirty-nine weeks of 2023, there was $26.4 million cash paid for income taxes compared to $21.7 million in 2022 for the same period. Cash paid for interest related to long-term debt was $25 thousand and $24 thousand in the first thirty-nine weeks of 2023 and 2022, respectively.

5

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Significant Accounting Policies

Basis of Presentation: The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring deferrals and accruals) considered necessary for a fair presentation have been included. The operating results for the periods presented are not necessarily indicative of the results to be expected for the full year. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements and there were no material subsequent events which require additional disclosure. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s latest Annual Report on Form 10-K.

(2) Current Relevant Accounting Standards

The Company regularly monitors recently issued accounting standards and assesses their applicability and impact. The Company believes that there are no accounting standard updates that have or will have a material or significant impact on the Company’s accounting policies.

(3) Marketable Securities

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets. FASB has established three levels of inputs that may be used to measure fair value:

Level 1Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available. The Company’s bond and commercial paper portfolio is valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm which includes various third-party pricing services. These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.

The Company accrues interest on its bond and commercial paper portfolio throughout the life of each bond and commercial paper held. Dividends from the equity securities are recognized as received. Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment gain of $2.2 million in the thirteen weeks ended September 30, 2023, which included an unrealized loss in equity securities of $437 thousand. In the thirteen weeks ended September 24, 2022, the Company recognized investment loss of $261 thousand, which included an unrealized loss in equity securities of $1.4 million. In the thirty-nine weeks ended September 30, 2023, the Company recognized investment income of $6.3 million, which included an unrealized loss in equity securities of $815 thousand. In the thirty-nine weeks ended September 24, 2022, the Company recognized investment income of $1.4 million, which included an unrealized loss in equity securities of $1.6 million.

6

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Marketable securities, as of September 30, 2023 and December 31, 2022, consisted of:

Gross

Gross

(amounts in thousands)

Amortized

Unrealized

Unrealized

Fair

September 30, 2023

    

Cost

    

Holding Gains

    

Holding Losses

    

Value

Available-for-sale:

Level 1

Equity securities

$

4,370

Level 2

Corporate and municipal bonds

$

172,623

$

1,609

$

(10,168)

164,063

Commercial Paper

50,666

618

51,285

Total

$

223,289

$

2,227

$

(10,168)

$

219,718

Gross

Gross

(amounts in thousands)

Amortized

Unrealized

Unrealized

Fair

December 31, 2022

    

Cost

    

Holding Gains

    

Holding Losses

    

Value

Available-for-sale:

Level 1

Equity securities

$

5,185

Level 2

Corporate and municipal bonds

$

190,025

$

2,110

$

(10,901)

181,234

Total

$

190,025

$

2,110

$

(10,901)

$

186,419

Maturities of marketable securities classified as available-for-sale at September 30, 2023, were as follows:

Amortized

Fair

(amounts in thousands)

    

Cost

    

Value

Available-for-sale:

Due within one year

$

88,980

$

89,498

Due after one year through five years

83,664

79,256

Due after five years through ten years

17,957

15,904

Due after ten years

32,688

30,690

Total

$

223,289

$

215,348

SERP Investments

The Company also maintains a non-qualified supplemental executive retirement plan for certain of its associates which allows them to defer income to future periods. Participants in the plans earn a return on their deferrals based on mutual fund investments. The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans. Such investments are reported on the Company’s Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment loss of $774 thousand in the thirteen weeks ended September 30, 2023, and investment loss of $1.2 million in the same period in 2022. The Company recognized investment income of $1.4 million and investment loss of $4.8 million in the thirty-nine weeks ended September 30, 2023, and September 24, 2022, respectively. The changes in the underlying liability to the associates are recorded in “Other income (expense).”

7

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable securities. The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.

Unrealized Gains (Losses)

on Available-for-Sale

(amounts in thousands)

    

Marketable Securities

Accumulated other comprehensive income (loss) balance as of December 31, 2022

$

(6,449)

Other comprehensive income (loss)

613

Net current period other comprehensive income (loss)

613

Accumulated other comprehensive income (loss) balance as of September 30, 2023

$

(5,836)

(5) Long-Term Debt

On September 1, 2016, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, N.A. (the “Credit Agreement”), which was amended on September 29, 2023, and matures on October 1, 2027. The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of September 30, 2023, the availability under the revolving credit agreement was $25.6 million, net of $4.4 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Interest expense related to long-term debt was $8 thousand in each of the thirteen weeks ended September 30, 2023, and September 24, 2022. Interest expense related to long-term debt was $25 thousand and $24 thousand in the thirty-nine weeks ended September 30, 2023 and September 24, 2022, respectively.

(6) Revenue Recognition

The Chief Operating Officer, the Company’s chief operating decision maker, analyzes store operational revenues by geographical area but each area offers customers similar products, has similar distribution methods, and is supported by centralized management processes. The Company’s operations are reported as a single reportable segment.

The following tables represent net sales by type of product for the thirteen and thirty-nine weeks ended September 30, 2023, and September 24, 2022:

13 Weeks Ended

(amounts in thousands)

September 30, 2023

September 24, 2022

Grocery

    

$

960,072

82.7

%

$

973,707

84.6

%

Pharmacy

133,289

11.5

107,366

9.3

Fuel

64,524

5.6

66,350

5.8

Manufacturing

2,421

0.2

3,128

0.3

Total net sales

$

1,160,306

100.0

%  

$

1,150,551

100.0

%

39 Weeks Ended

(amounts in thousands)

September 30, 2023

September 24, 2022

Grocery

$

2,915,444

83.7

%  

$

2,867,699

84.5

%  

Pharmacy

380,917

10.9

317,564

9.4

Fuel

179,768

5.2

195,521

5.8

Manufacturing

7,846

0.2

9,069

0.3

Total net sales

$

3,483,975

100.0

%

$

3,389,853

100.0

%

8

Table of Contents

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(7) Leases

As of September 30, 2023, the Company leased approximately 49% of its open store facilities under operating leases that expire at various dates through 2036, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment.

The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen and thirty-nine weeks ended September 30, 2023, and September 24, 2022.

13 Weeks Ended

39 Weeks Ended

(amounts in thousands)

    

    

September 30, 2023

September 24, 2022

September 30, 2023

September 24, 2022

Operating lease cost

$

11,778

$

11,978

$

35,351

$

35,633

Variable lease cost

2,837

2,578

8,493

8,165

Lease or sublease income

(2,649)

(2,421)

(7,755)

(7,259)

Net lease cost

$

11,966

$

12,135

$

36,089

$

36,539

9

WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of Weis Markets, Inc.’s (the “Company”) financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q, the Company’s audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned "Forward-Looking Statements" immediately following this analysis.

Company Summary

Weis Markets is a conventional supermarket chain that operates 197 retail stores with over 23 thousand associates located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia and West Virginia. Approximately 97% of Weis Markets associates are paid an hourly wage. Its products sold include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services at certain locations, deli products, prepared foods, bakery products, beer and wine, fuel, and general merchandise items, such as health and beauty care and household products. The store product selection includes national, local and private brands. The Company promotes competitive pricing by using Everyday Lower Price; Low Price Guarantee; Low, Low Price; 3 Day Sale; senior and military discounts; and Loyalty programs. The Loyalty program includes reward points that may be redeemed for discounts on items in store, at one of the Company’s fuel stations or one of its third-party fuel station partners.

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 56% of products with the remaining being supplied by direct store delivery vendors and regional wholesalers. In addition, the Company has three manufacturing facilities which process milk, ice cream and fresh meat products. The corporate offices are located in Sunbury, PA where the Company was founded in 1912.

The COVID-19 pandemic resulted in government mandated shutdowns in early 2020, as well as multiple legislative acts to provide emergency economic assistance for individuals, families and businesses affected by the novel coronavirus pandemic. These events were accretive to the Company’s sales and gross profits compared to the time periods preceding the impact of the novel coronavirus pandemic.

The Company continues to innovate and remain relevant to industry trends and offer customer convenience by presenting programs like “Weis 2 Go Online” and home delivery. As of September 30, 2023, the Company offered Weis 2 Go Online in 188 of its locations. Weis 2 Go Online allows the customer to order on-line and then pick up their order at a drive-thru location at the store. The Company also currently offers home delivery to customers in all 197 of its locations via multiple grocery delivery partners.

10

Table of Contents

WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)

Two-Year Stacked Comparable Store Sales Analysis

Management is providing Comparable Store Sales Two-Year Stacked analysis, a non-GAAP measure, because management believes this metric is useful to investors and analysts. A Comparable Store Sales Two-Year Stacked analysis presents a comparison of results and trends over a longer period of time to demonstrate the effect of the novel coronavirus pandemic on the operating results of the Company. Information presented in the tables below is not intended for use as an alternative to any other measure of performance. It is not recommended that this table be considered a substitute for the Company’s operating results as reported in accordance with GAAP.

Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to significant fluctuations caused by the novel coronavirus pandemic and inflationary indicators in the food retail industry, management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis. The following tables provide the two-year stacked comparable store sales, including and excluding fuel, for the periods ended September 30, 2023, and September 24, 2022, as well as periods ended September 24, 2022, and September 25, 2021, respectively. Comparable store sales increased 0.8 percent on an individual year-over-year basis and increased 8.7 percent on a two-year stacked basis for the thirteen weeks ended September 30, 2023. Comparable store sales increased 2.5 percent on an individual year-over-year basis and increased 11.1 percent on a two-year stacked basis in the thirty-nine weeks ended September 30, 2023.

Percentage Change

13 Weeks Ended

2023 vs. 2022

2022 vs. 2021

Comparable store sales (individual year)

0.8

%

7.9

%

Comparable store sales (two-year stacked)

8.7

Comparable store sales, excluding fuel (individual year)

1.1

6.7

%

Comparable store sales, excluding fuel (two-year stacked)

7.8

%

Percentage Change

39 Weeks ended

2023 vs. 2022

2022 vs. 2021

Comparable store sales (individual year)

2.5

%

8.6

%

Comparable store sales (two-year stacked)

11.1

Comparable store sales, excluding fuel (individual year)

3.1

6.8

Comparable store sales, excluding fuel (two-year stacked)

9.9

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.

11

Table of Contents

WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)

Results of Operations

Analysis of Consolidated Statements of Income

Percentage Change

13 Weeks Ended

39 Weeks Ended

13 Weeks Ended

39 Weeks Ended

(amounts in thousands, except per share amounts)

September 30, 2023

September 24, 2022

September 30, 2023

September 24, 2022

2023 vs. 2022

2023 vs. 2022

Net sales

$

1,160,306

$

1,150,551

$

3,483,975

$

3,389,853

0.8

%

2.8

%

Cost of sales, including advertising, warehousing and distribution expenses

874,583

862,908

2,613,417

2,516,311

1.4

3.9

Gross profit on sales

285,723

287,643

870,558

873,542

(0.7)

(0.3)

Gross profit margin

24.6

%

25.0

%

25.0

%

25.8

%

Operating, general and administrative expenses

256,050

253,985

762,644

750,066

0.8

1.7

O, G & A, percent of net sales

22.1

%

22.1

%

21.9

%

22.1

%

Income from operations

29,673

33,658

107,914

123,476

(11.8)

(12.6)

Operating margin

2.6

%

2.9

%

3.1

%

3.6

%

Investment income (loss) and interest expense

1,409

(1,483)

7,715

(3,394)

195.0

327.3

Investment income (loss) and interest expense, percent of net sales

0.1

%

(0.1)

%

0.2

%

(0.1)

%

Other income (expense)

774

1,214

(1,399)

4,805

(36.2)

(129.1)

Other income (expense), percent of net sales

0.1

%

0.1

%

(0.0)

%

0.1

%

Income before provision for income taxes

31,856

33,389

114,230

124,887

(4.6)

(8.5)

Income before provision for income taxes, percent of net sales

2.7

%

2.9

%

3.3

%

3.7

%

Provision for income taxes

8,630

4,731

30,925

28,574

82.4

8.2

Effective income tax rate

27.1

%

14.2

%

27.1

%

22.9