Ingles Markets(US:IMKTA)2023-08-03 20:14Financial Performance - Net income for the three months ended June 24, 2023, was $48.3 million, a decrease of 28.7% from $67.8 million for the same period in 2022[74]. - Net income for the nine months ended June 24, 2023, totaled $158.2 million, a decrease from $202.6 million for the same period in 2022[84]. - Basic and diluted earnings per share for Class A Common Stock were $2.60 and $2.54, respectively, for the June 2023 quarter, down from $3.65 and $3.57 for the June 2022 quarter[83]. - Net income totaled $158.2 million for the nine-month period ended June 24, 2023, compared to $202.6 million for the same period in 2022, with basic and diluted earnings per share for Class A Common Stock decreasing from $10.91 to $8.51[95]. Sales and Revenue - Net sales decreased by $24.3 million, or 1.7%, to $1.43 billion for the three months ended June 24, 2023, compared to $1.46 billion for the same period in 2022[75]. - Comparable store sales increased by 3.8% excluding fuel sales for the three months ended June 24, 2023[75]. - Net sales increased by $81.0 million, or 1.9%, to $4.31 billion for the nine months ended June 24, 2023, compared to $4.23 billion for the same period in 2022, driven primarily by increases in grocery, non-foods, and perishables sales[85]. Profitability - Gross profit for the three-month period ended June 24, 2023, was $338.1 million, a decrease of 3.9% from $351.9 million for the same period in 2022[77]. - Gross profit for the nine-month period ended June 24, 2023, totaled $1.04 billion, a decrease of $15.8 million, or 1.5%, compared to $1.05 billion for the same period in 2022, with gross profit as a percentage of sales declining from 24.9% to 24.0%[89]. Expenses - Operating and administrative expenses increased by $13.6 million, or 5.3%, to $270.9 million for the three months ended June 24, 2023[78]. - Operating and administrative expenses increased by $43.8 million, or 5.7%, to $816.0 million for the nine months ended June 24, 2023, with expenses as a percentage of sales rising from 18.3% to 18.9%[90]. Debt and Cash Flow - Total debt at June 2023 was $553.4 million, down from $575.2 million at June 2022[81]. - The company generated $177.0 million in net cash from operations for the nine-month period ended June 24, 2023, a decrease from $261.6 million for the same period in 2022[101]. - Cash used by investing activities totaled $135.2 million for the nine-month period ended June 24, 2023, compared to $181.8 million for the same period in 2022[102]. Capital Expenditures - Capital expenditures totaled $137.1 million for the nine-month period ended June 24, 2023, with plans for fiscal 2023 capital expenditures estimated between $170 million and $190 million[96][97]. - The company expects annual capital expenditures to be in the range of approximately $100 million to $160 million going forward to maintain a modern store base[98]. Market Conditions and Risks - Inflation has reached levels not experienced in decades, with food costs increasing by 4.7% and overall inflation at 3.0% for the twelve months ended June 2023[117][119]. - The Company acknowledges significant risks and uncertainties that could affect its actual results, including the impact of the COVID-19 pandemic[121]. - Pricing pressures and competitive factors are identified as potential risks to the Company's revenues and profitability[121]. - Changes in laws and government regulations may impact the Company's operations and financial position[121]. Strategic Focus - The Company is focused on reducing costs and improving operating results as part of its growth strategy[121]. - The Company has highlighted the importance of efficient distribution of food products in its operational strategy[121]. - The Company’s ability to manage rapid expansion and implement its strategies is crucial for future performance[121]. Dividends and Financial Instruments - The company plans to continue paying regular cash dividends of $0.165 per share on Class A Common Stock and $0.15 per share on Class B Common Stock[114][115]. - The Company is currently party to interest rate swap agreements with a total notional amount of $152.6 million[123]. - The Company does not utilize financial instruments for trading or speculative purposes, nor does it typically use leveraged financial instruments[123]. - There have been no material changes in market risk factors since the last Annual Report filed on November 23, 2022[123]. - The Company does not undertake any obligation to update forward-looking statements unless required by law[122].