Ingles Markets Inc 10-Q for FY2022 Q2

Ingles Markets Inc (IMKTA)

10-Q 2022-05-05 For: 2022-03-26

Added on April 10, 2026

About this 10-Q

Ingles Markets Inc filed this 10-Q on May 5, 2022, covering the quarter ended March 26, 2022 (FY2022 Q2).

Headline figures

Quarter ended March 26, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.38B; up 16.3% from $1.18B a year earlier
Net income: $68.64M; up 31.5% from net income of $52.19M a year earlier

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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)


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


Large Accelerated Filer x	Accelerated Filer ¨
Non-Accelerated Filer ¨	Smaller Reporting Company ¨
	Emerging Growth Company ¨



		Page No.
Part I – Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of March 26, 2022 and September 25, 2021		3

Condensed Consolidated Statements of Income and Comprehensive Income for the
Three Months Ended March 26, 2022 and March 27, 2021		4
Six Months Ended March 26, 2022 and March 27, 2021		5

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Six Months Ended March 26, 2022 and March 27, 2021		6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 26, 2022 and March 27, 2021		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 6. Exhibits		23

Signatures		24



	March 26,		September 25,
	2022		2021
ASSETS
Current Assets:
Cash and cash equivalents	$	65,624,291	$	70,313,350
Short term investments		115,007,106		5,000,000
Receivables - net		98,010,655		95,082,014
Inventories		397,891,256		389,953,456
Other current assets		24,906,417		15,091,595
Total Current Assets		701,439,725		575,440,415
Property and Equipment - Net		1,343,410,698		1,370,769,432
Operating lease right of use assets		41,667,691		40,145,098
Other Assets		37,658,397		31,989,010
Total Assets	$	2,124,176,511	$	2,018,343,955

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	17,618,760	$	17,600,739
Current portion of operating lease liabilities		8,395,245		8,635,998
Accounts payable - trade		188,102,503		189,432,027
Accrued expenses and current portion of other long-term liabilities		73,872,036		90,428,567
Total Current Liabilities		287,988,544		306,097,331
Deferred Income Taxes		73,964,000		72,768,000
Long-Term Debt		560,832,573		571,913,204
Noncurrent operating lease liabilities		35,461,720		33,887,935
Other Long-Term Liabilities		45,078,425		50,418,947
Total Liabilities		1,003,325,262		1,035,085,417
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; ‎14,325,235 shares issued and outstanding March 26, 2022; ‎14,271,335 shares issued and outstanding at September 25, 2021		716,262		713,567
Class B, convertible to Class A, $0.05 par value; ‎100,000,000 shares authorized; ‎4,669,141 shares issued and outstanding March 26, 2022; ‎4,723,041 shares issued and outstanding at September 25, 2021		233,457		236,152
Paid-in capital in excess of par value		—		—
Accumulated other comprehensive income		5,463,160		(3,426,140)
Retained earnings		1,114,438,370		985,734,959
Total Stockholders’ Equity		1,120,851,249		983,258,538
Total Liabilities and Stockholders’ Equity	$	2,124,176,511	$	2,018,343,955



	Three Months Ended
	March 26,		March 27,
	2022		2021
Net sales	$	1,377,118,668	$	1,184,554,737
Cost of goods sold		1,028,556,135		874,054,346
Gross profit		348,562,533		310,500,391
Operating and administrative expenses		254,739,175		236,850,173
Gain from sale or disposal of assets		1,265,254		663,278
Income from operations		95,088,612		74,313,496
Other income, net		1,344,269		645,287
Interest expense		5,425,534		6,194,790
Income before income taxes		91,007,347		68,763,993
Income tax expense		22,366,000		16,575,000
Net income	$	68,641,347	$	52,188,993

Other comprehensive income:
Change in fair value of interest rate swap	$	9,896,413	$	6,755,876
Income tax expense		(2,418,000)		(1,650,000)
Other comprehensive income, net of tax		7,478,413		5,105,876
Comprehensive income	$	76,119,760	$	57,294,869

Per share amounts:
Class A Common Stock
Basic earnings per common share	$	3.70	$	2.65
Diluted earnings per common share	$	3.61	$	2.58
Class B Common Stock
Basic earnings per common share	$	3.36	$	2.41
Diluted earnings per common share	$	3.36	$	2.41
Cash dividends per common share
Class A Common Stock	$	0.165	$	0.165
Class B Common Stock	$	0.150	$	0.150



	Six Months Ended
	March 26,		March 27,
	2022		2021
Net sales	$	2,768,648,179	$	2,374,997,878
Cost of goods sold		2,069,541,379		1,750,309,345
Gross profit		699,106,800		624,688,533
Operating and administrative expenses		514,824,580		475,049,250
Gain from sale or disposal of assets		1,209,226		1,114,997
Income from operations		185,491,446		150,754,280
Other income, net		2,936,323		1,337,304
Interest expense		10,839,405		12,595,503
Income before income taxes		177,588,364		139,496,081
Income tax expense		42,758,000		33,483,000
Net income	$	134,830,364	$	106,013,081

Other comprehensive income:
Change in fair value of interest rate swap	$	11,763,300	$	9,519,614
Income tax expense		(2,874,000)		(2,325,000)
Other comprehensive income, net of tax		8,889,300		7,194,614
Comprehensive income	$	143,719,664	$	113,207,695

Per share amounts:
Class A Common Stock
Basic earnings per common share	$	7.26	$	5.38
Diluted earnings per common share	$	7.10	$	5.24
Class B Common Stock
Basic earnings per common share	$	6.60	$	4.89
Diluted earnings per common share	$	6.60	$	4.89
Cash dividends per common share
Class A Common Stock	$	0.33	$	0.33
Class B Common Stock	$	0.30	$	0.30



							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 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		—		5,105,876
Cash dividends	—		—	—		—		—		—		(3,252,276)		(3,252,276)
Stock repurchases, at cost	—		—	(1,265,400)		(63,270)		(12,311,249)		—		(67,624,069)		(79,998,588)
Common stock conversions	32,750		1,638	(32,750)		(1,638)		—		—		—		—
Balance, March 27, 2021	14,253,285	$	712,665	4,741,091	$	237,054	$	—	$	(3,056,682)	$	848,142,599	$	846,035,636

Balance, September 25, 2021	14,271,335	$	713,567	4,723,041	$	236,152	$	—	$	(3,426,140)	$	985,734,959	$	983,258,538
Net income	—		—	—		—		—		—		66,189,018		66,189,018
Other comprehensive income, net of income tax	—		—	—		—		—		1,410,887		—		1,410,887
Cash dividends	—		—	—		—		—		—		(3,063,227)		(3,063,227)
Common stock conversions	33,300		1,665	(33,300)		(1,665)		—		—		—		—
Balance, December 25, 2021	14,304,635	$	715,232	4,689,741	$	234,487	$	—	$	(2,015,253)	$	1,048,860,750	$	1,047,795,216
Net income	—		—	—		—		—		—		68,641,347		68,641,347
Other comprehensive income, net of income tax	—		—	—		—		—		7,478,413		—		7,478,413
Cash dividends	—		—	—		—		—		—		(3,063,727)		(3,063,727)
Common stock conversions	20,600		1,030	(20,600)		(1,030)		—		—		—		—
Balance, March 26, 2022	14,325,235	$	716,262	4,669,141	$	233,457	$	—	$	5,463,160	$	1,114,438,370	$	1,120,851,249



Year
2026	102.000%
2027	101.333%
2028	100.667%
2029 and thereafter	100.000%



	Three Months Ended				Six Months Ended
	March 26, 2022				March 26, 2022
	Class A		Class B		Class A		Class B
Numerator: Allocated net income
Net income allocated, basic	$	52,934,311	$	15,707,036	$	103,831,190	$	30,999,174
Conversion of Class B to Class A shares		15,707,036		—		30,999,174		—
Net income allocated, diluted	$	68,641,347	$	15,707,036	$	134,830,364	$	30,999,174

Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic		14,320,981		4,673,395		14,299,096		4,695,280
Conversion of Class B to Class A shares		4,673,395		—		4,695,280		—
Weighted average shares outstanding, diluted		18,994,376		4,673,395		18,994,376		4,695,280

Earnings per share
Basic	$	3.70	$	3.36	$	7.26	$	6.60
Diluted	$	3.61	$	3.36	$	7.10	$	6.60



	Three Months Ended				Six Months Ended
	March 27, 2021				March 27, 2021
	Class A		Class B		Class A		Class B
Numerator: Allocated net income
Net income allocated, basic	$	37,772,564	$	14,416,429	$	76,588,658	$	29,424,423
Conversion of Class B to Class A shares		14,416,429		—		29,424,423		—
Net income allocated, diluted	$	52,188,993	$	14,416,429	$	106,013,081	$	29,424,423

Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic		14,233,200		5,970,954		14,223,381		6,008,584
Conversion of Class B to Class A shares		5,970,954		—		6,008,584		—
Weighted average shares outstanding, diluted		20,204,154		5,970,954		20,231,965		6,008,584

Earnings per share
Basic	$	2.65	$	2.41	$	5.38	$	4.89
Diluted	$	2.58	$	2.41	$	5.24	$	4.89


Fiscal Year
Remainder of 2022	$	4,996,500
2023		9,547,692
2024		6,763,393
2025		5,962,685
2026		4,230,737
Thereafter		24,152,866
Total lease payments	$	55,653,873
Less amount representing interest		11,796,908
Present value of lease liabilities	$	43,856,965


Fiscal Year
Remainder of 2022	$	7,530,608
2023		13,805,776
2024		12,605,769
2025		11,241,965
2026		8,353,538
Thereafter		34,011,392
Total minimum future rental income	$	87,549,048

Level 1 Inputs –	Quoted prices for identical assets or liabilities in active markets.

Level 2 Inputs –	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs –	Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.



	Carrying				Fair Value
	Amount		Fair Value		Measurements
Senior Notes	$	350,000	$	327,250	Level 2
Facility Bonds		58,970		58,970	Level 2
Secured notes payable and other		169,481		169,462	Level 2
Interest rate swap derivative contracts asset		(7,232)		(7,232)	Level 2
Non-qualified retirement plan assets		19,702		19,702	Level 2



	Six Months Ended
	March 26,		March 27,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	134,830,364	$	106,013,081
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		59,264,873		60,205,801
Non cash operating lease cost		3,493,003		4,011,403
Gain from sale or disposal of assets		(1,209,226)		(1,114,997)
Receipt of advance payments on purchases contracts		1,147,709		775,000
Recognition of advance payments on purchases contracts		(1,494,340)		(1,511,486)
Deferred income taxes		(1,678,000)		858,000
Changes in operating assets and liabilities:
Receivables		(2,928,641)		(7,442,313)
Inventory		(7,937,800)		(19,763,979)
Other assets		(8,462,044)		(1,415,060)
Operating lease liabilities		(3,682,564)		(4,199,960)
Accounts payable and accrued expenses		(15,861,984)		(21,731,932)
Net Cash Provided by Operating Activities		155,481,350		114,683,558
Cash Flows from Investing Activities:
Purchase of short term investments		(110,007,106)		—
Proceeds from sales of property and equipment		1,509,285		1,356,964
Capital expenditures		(34,096,602)		(69,444,630)
Net Cash Used by Investing Activities		(142,594,423)		(68,087,666)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings		—		600,674,373
Payments on short-term borrowings		—		(546,496,281)
Principal payments on long-term borrowings		(11,449,032)		(12,317,464)
Stock repurchases		—		(79,998,588)
Dividends paid		(6,126,954)		(6,504,427)
Net Cash Used by Financing Activities		(17,575,986)		(44,642,387)
Net (Decrease) Increase in Cash and Cash Equivalents		(4,689,059)		1,953,505
Cash and cash equivalents at beginning of period		70,313,350		6,903,955
Cash and Cash Equivalents at End of Period	$	65,624,291	$	8,857,460



		Three Months Ended		Six Months Ended
		March 26, 2022		March 26, 2022
Rents earned on owned and subleased properties:
Base rentals	$	4,773,104	$	9,670,462
Variable rentals		67,892		135,784
Total		4,840,996		9,806,246
Depreciation on owned properties leased to others		(1,463,937)		(2,927,875)
Other shopping center expenses		(670,365)		(1,318,152)
Total	$	2,706,694	$	5,560,219



	Three Months Ended				Six Months Ended
	March 26,		March 27,		March 26,		March 27,
	2022		2021		2022		2021
Revenues from unaffiliated customers:
Grocery	$	482,179	$	427,219	$	970,585	$	869,339
Non-foods		289,419		268,799		594,091		548,487
Perishables		355,651		320,493		720,001		641,756
Gasoline		200,192		130,679		391,025		241,148
Total Retail	$	1,327,441	$	1,147,190	$	2,675,702	$	2,300,730
Other		49,678		37,365		92,946		74,268
Total revenues from unaffiliated customers	$	1,377,119	$	1,184,555	$	2,768,648	$	2,374,998

Income from operations:
Retail	$	88,663	$	67,645	$	174,162	$	139,164
Other		6,426		6,668		11,329		11,590
Total income from operations	$	95,089	$	74,313	$	185,491	$	150,754



	March 26,		September 25,
	2022		2021
Assets:
Retail	$	1,893,939	$	1,794,160
Other		233,375		226,762
Elimination of intercompany receivable		(3,137)		(2,578)
Total assets	$	2,124,177	$	2,018,344



Total retail sales for the three months ended March 27, 2021	$	1,147,190
Comparable store sales increase (including gasoline)		170,752
Impact of stores opened in fiscal 2021		13,976
Impact of stores closed in fiscal 2021		(2,507)
Other		(1,970)
Total retail sales for the three months ended March 26, 2022	$	1,327,441




			Increase
	Increase		as a % of
	in millions		sales
Salaries and wages	$	10.1	0.73	%
Depreciation and amortization	$	1.7	0.13	%
Bank charges	$	2.2	0.16	%
Professional fees	$	1.4	0.10	%



Total retail sales for the six months ended March 27, 2021	$	2,300,730
Comparable store sales increase (including gasoline)		351,984
Impact of stores opened in fiscal 2021		28,776
Impact of stores closed in fiscal 2021		(5,080)
Other		(708)
Total retail sales for the six months ended March 26, 2022	$	2,675,702



	Twelve Months Ended
	March 2022
All items	8.5	%
Food at home	10.0	%
Energy	32.0	%


3.1	*	Composite Articles of Incorporation of Ingles Markets, Incorporated


101	*	The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Statements of Earnings; (ii) the Consolidated Balance Sheets; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements of Comprehensive Income; and (v) the Notes to the Consolidated Financial Statements.


104	*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



		INGLES MARKETS, INCORPORATED

Date: May 5, 2022		/s/ James W. Lanning
		James W. Lanning
		Chief Executive Officer and President

Date: May 5, 2022		/s/ Patricia E. Jackson
		Patricia E. Jackson, CPA,
		Vice President-Finance and Chief Financial Officer

Class	Authorized	Par	Series
Class A Common Stock (hereinafter the Class A Common Stock)	150,000,000	$0.05	N/A
Class B Common Stock (hereinafter the Class B Common Stock)	100,000,000	$0.05	N/A
Preferred Stock	10,000,000	$0.05	As determined by the Board of Directors.