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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 27, 2021

 

¨         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 ¨

Accelerated Filer x

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 3, 2021, the Registrant had 14,253,285 shares of Class A Common Stock, $0.05 par value per share, outstanding and 4,741,091 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 27, 2021 and September 26, 2020

  

3

Condensed Consolidated Statements of Income and Comprehensive Income for the

  

Three Months Ended March 27, 2021 and March 28, 2020

4

Six Months Ended March 27, 2021 and March 28, 2020

5

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Six Months Ended March 27, 2021 and March 28, 2020

  

6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 27, 2021 and March 28, 2020

  

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 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

22

    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 27,

September 26,

2021

2020

ASSETS

Current Assets:

Cash and cash equivalents

$

8,857,460

$

6,903,955

Receivables - net

88,800,670

81,358,357

Inventories

386,588,417

366,824,438

Other current assets

12,749,243

15,100,110

Total Current Assets

496,995,790

470,186,860

Property and Equipment - Net

1,359,255,345

1,354,489,690

Operating lease right of use assets

44,525,829

46,590,718

Other Assets

31,797,560

28,031,634

Total Assets

$

1,932,574,524

$

1,899,298,902

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of long-term debt

$

19,365,001

$

19,305,976

Current portion of operating lease liabilities

8,559,693

8,384,435

Accounts payable - trade

194,848,822

204,110,150

Accrued expenses and current portion of other long-term liabilities

71,251,436

92,012,346

Total Current Liabilities

294,024,952

323,812,907

Deferred Income Taxes

76,517,000

73,334,000

Long-Term Debt

628,435,385

586,198,360

Noncurrent operating lease liabilities

38,534,030

40,962,735

Other Long-Term Liabilities

49,027,521

55,659,943

Total Liabilities

1,086,538,888

1,079,967,945

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;
14,253,285 shares issued and outstanding March 27, 2021;
14,212,360 shares issued and outstanding at September 26, 2020

712,665

710,618

Class B, convertible to Class A, $0.05 par value;
100,000,000 shares authorized;
4,741,091 shares issued and outstanding March 27, 2021;
6,047,416 shares issued and outstanding at September 26, 2020

237,054

302,371

Paid-in capital in excess of par value

12,311,249

Accumulated other comprehensive income

(3,056,682)

(10,251,296)

Retained earnings

848,142,599

816,258,015

Total Stockholders’ Equity

846,035,636

819,330,957

Total Liabilities and Stockholders’ Equity

$

1,932,574,524

$

1,899,298,902

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 27,

March 28,

2021

2020

Net sales

$

1,184,554,737

$

1,145,482,049

Cost of goods sold

874,054,346

853,894,303

Gross profit

310,500,391

291,587,746

Operating and administrative expenses

236,850,173

228,395,420

Gain from sale or disposal of assets

663,278

108,352

Income from operations

74,313,496

63,300,678

Other income, net

645,287

207,441

Interest expense

6,194,790

10,183,839

Income before income taxes

68,763,993

53,324,280

Income tax expense

16,575,000

13,032,000

Net income

$

52,188,993

$

40,292,280

Other comprehensive income (expense):

Change in fair value of interest rate swap

$

6,755,876

$

(13,926,534)

Income tax (expense) benefit

(1,650,000)

3,401,000

Other comprehensive income (expense), net of tax

5,105,876

(10,525,534)

Comprehensive income

$

57,294,869

$

29,766,746

Per share amounts:

Class A Common Stock

Basic earnings per common share

$

2.65

$

2.04

Diluted earnings per common share

$

2.58

$

1.99

Class B Common Stock

Basic earnings per common share

$

2.41

$

1.86

Diluted earnings per common share

$

2.41

$

1.86

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 27,

March 28,

2021

2020

Net sales

$

2,374,997,878

$

2,223,836,986

Cost of goods sold

1,750,309,345

  

1,674,759,514

Gross profit

624,688,533

549,077,472

Operating and administrative expenses

475,049,250

450,374,270

Gain from sale or disposal of assets

1,114,997

3,072,837

Income from operations

150,754,280

101,776,039

Other income, net

1,337,304

404,928

Interest expense

12,595,503

22,133,125

Loss on early extinguishment of debt

3,719,209

Income before income taxes

139,496,081

76,328,633

Income tax expense

33,483,000

18,349,000

Net income

$

106,013,081

$

57,979,633

Other comprehensive income (expense):

Change in fair value of interest rate swap

$

9,519,614

$

(11,077,655)

Income tax (expense) benefit

(2,325,000)

2,704,014 

Other comprehensive income (expense), net of tax

7,194,614

(8,373,641)

Comprehensive income

$

113,207,695

$

49,605,992

Per share amounts:

Class A Common Stock

Basic earnings per common share

$

5.38

$

2.94

Diluted earnings per common share

$

5.24

$

2.86

Class B Common Stock

Basic earnings per common share

$

4.89

$

2.68

Diluted earnings per common share

$

4.89

$

2.68

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 27, 2021 AND MARCH 28, 2020

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 28, 2019

14,180,485 

  

$

709,024 

6,079,291 

$

303,965 

$

12,311,249 

$

(1,265,650)

$

650,664,018 

$

662,722,606 

Net income

17,687,353 

17,687,353 

Other comprehensive income, net of income tax

2,151,893 

2,151,893 

Cash dividends

(3,251,673)

(3,251,673)

Common stock conversions

12,500 

625 

(12,500)

(625)

Balance, December 28, 2019

14,192,985 

$

709,649 

6,066,791 

$

303,340 

$

12,311,249 

$

886,243 

$

665,099,698 

$

679,310,179 

Net income

40,292,280 

40,292,280 

Other comprehensive income, net of income tax

(10,525,534)

(10,525,534)

Cash dividends

(3,251,862)

(3,251,862)

Common stock conversions

375 

19 

(375)

(19)

Balance, March 28, 2020

14,193,360 

$

709,668 

6,066,416 

$

303,321 

$

12,311,249 

$

(9,639,291)

$

702,140,116 

$

705,825,063 

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