Ingles Markets(IMKTA) - 2024 Q1 - Quarterly Report

Financial Performance - Net income for the three-month period ended December 30, 2023, totaled $43.4 million, a decrease of 37.5% compared to $69.4 million for the same period in 2022[82]. - Net sales decreased by $12.3 million, or 0.82%, to $1.48 billion for the three months ended December 30, 2023, compared to $1.49 billion for the same period in 2022[73]. - Gross profit for the three-month period ended December 30, 2023, was $348.8 million, a decrease of $22.4 million, or 6.0%, from $371.2 million for the same period in 2022[74]. - Operating and administrative expenses increased by $13.6 million, or 4.9%, to $289.8 million for the three months ended December 30, 2023, compared to $276.2 million for the same period in 2022[76]. - The company generated $15.5 million in net cash from operations for the December 2023 quarter, a decrease from $57.3 million in the December 2022 quarter[88]. Debt and Liquidity - Total debt at December 30, 2023, was $546.9 million, down from $564.5 million at December 24, 2022[80]. - The Company completed the funding of $99.7 million of Bonds for the construction of new warehouse and distribution space, maturing on January 1, 2036[92]. - As of December 30, 2023, the outstanding balance of the Bonds is $54.4 million, with mandatory annual redemptions of $4.5 million starting from January 1, 2014[93]. - The Company refinanced approximately $60 million secured borrowing obligations with a SOFR-based loan, maturing in October 2027, and has an interest rate swap agreement for a notional amount of $23.0 million at a fixed rate of 3.962%[94]. - The Company was in compliance with its financial covenants as of December 30, 2023, allowing for approximately $1.7 billion of additional borrowings[98]. - The Company's principal sources of liquidity include cash flow from operations and long-term debt financing, which are expected to meet planned capital expenditures and working capital requirements[99]. Capital Expenditures - Capital expenditures totaled $63.2 million for the three-month period ended December 30, 2023, with plans for fiscal 2024 capital expenditures estimated between $160 million and $200 million[83][84]. Store Operations - The company operated 198 stores as of December 30, 2023, maintaining the same number of stores as of December 24, 2022[73]. Tax and Dividends - The effective tax rate for the three months ended December 30, 2023, was 24.6%, compared to 24.5% for the same period in 2022[81]. - 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[101]. - The Company expects to continue paying regular cash dividends, subject to the discretion of the Board of Directors and compliance with financial covenants[102]. Market Conditions - The annualized change in the Consumer Price Index for all items was 3.4%, with food at home increasing by 1.3% and energy costs decreasing by 2.0% over the past twelve months[105]. Risk Management - The Company is a party to interest rate swap agreements for a current aggregate notional amount of $145.7 million, with no significant changes in market risk factors reported[109].