Ingles Markets(US:IMKTA)2023-02-02 21:15Financial Performance - Net income for the first quarter of fiscal 2023 totaled $69.4 million, compared with $66.2 million for the first quarter of fiscal 2022, reflecting a growth driven by increased retail grocery sales and controlled operating expenses [69]. - Net sales increased by $101.8 million, or 7.3%, to $1.5 billion for the three months ended December 24, 2022, with comparable store sales also rising by 7.3% excluding fuel sales [70]. - Gross profit for the three-month period ended December 24, 2022, totaled $371.2 million, an increase of $20.7 million, or 5.9%, compared to $350.5 million for the same period in 2021, although gross profit as a percentage of sales decreased to 24.9% [71]. - Operating and administrative expenses increased by $16.1 million, or 6.2%, to $276.2 million for the three months ended December 24, 2022, with expenses as a percentage of sales slightly improving to 18.5% [72]. - The effective tax rate for the three months ended December 24, 2022, was 24.5%, compared to 23.6% for the same period in 2021 [77]. Cash Flow and Investments - The company generated $57.3 million in net cash from operations for the December 2022 three-month period, a decrease from $95.0 million in the same period of 2021, primarily due to higher working capital needs [84]. - Cash used by investing activities for the three-month period ended December 24, 2022, was $58.2 million, a decrease from $131.1 million in the same period of 2021 [85]. - Cash used by financing activities totaled $10.7 million for the three-month period ended December 24, 2022, compared to $6.5 million for the same period in 2021 [86]. Debt and Financing - Interest expense totaled $5.3 million for the three-month period ended December 24, 2022, with total debt at $564.5 million, down from $586.1 million a year earlier [76]. - The Company has a $150.0 million line of credit that matures in June 2026, with no borrowings outstanding as of December 24, 2022 [87]. - The outstanding balance of the Bonds is $59.0 million as of December 24, 2022, with mandatory redemptions of $4.5 million annually since January 1, 2014 [89]. - The Company has interest rate swap agreements with a current aggregate notional amount of $159.5 million to hedge floating rate debt [106]. Capital Expenditures - Capital expenditures totaled $59.3 million for the three-month period ended December 24, 2022, with plans for fiscal 2023 capital expenditures expected to be between $120 million and $140 million [79][80]. Dividends and Financial Health - The Company has paid regular quarterly cash dividends of $0.165 per share on Class A Common Stock and $0.15 per share on Class B Common Stock since December 27, 1993 [97]. - The Company expects to continue paying regular cash dividends, subject to the discretion of the Board of Directors and financial conditions [98]. - The Company was in compliance with its financial covenants as of December 24, 2022, allowing for approximately $2.3 billion of additional borrowings [94]. - The Company anticipates that its financial resources will be sufficient to meet planned capital expenditures and working capital requirements for the foreseeable future [95]. Market Conditions - Inflation for food at home reached 11.8% and overall inflation was 6.5% for the twelve months ended December 2022 [102][101]. Operations - The company operates 198 supermarkets across several states, maintaining a focus on a wide variety of food and non-food products, including certified organic items [57]. - Vendor allowances applied as a reduction of merchandise costs totaled $34.4 million for the fiscal quarter ended December 24, 2022, compared to $31.9 million for the same quarter in 2021 [63].