Weis Markets Inc 10-Q for FY2020 Q2

Weis Markets Inc (WMK)

10-Q 2020-08-05 For: 2020-06-27

Added on April 08, 2026

About this 10-Q

Weis Markets Inc filed this 10-Q on August 5, 2020, covering the quarter ended June 27, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 27, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.1B; up 23.7% from $887.97M a year earlier
Net income: $41.47M; up 102.5% from net income of $20.48M a year earlier

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[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 27, 2020
	or
[ ]	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 1-5039


Large accelerated filer [ ]		Accelerated filer [X]
Non-accelerated filer [ ]		Smaller reporting company [ ]
		Emerging growth company [ ]


Title of each class	Trading symbol	Name of exchange on which registered
Common stock, no par value	WMK	New York Stock Exchange


FORM 10-Q	Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets	1
Consolidated Statements of Income	2
Consolidated Statements of Comprehensive Income	3
Consolidated Statements of Shareholders’ Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3. Quantitative and Qualitative Disclosures about Market Risk	18
Item 4. Controls and Procedures	18
Part II. Other Information
Item 1a. Risk Factors	19
Item 6. Exhibits	20
Signatures	21
Exhibit 31.1 Rule 13a-14(a) Certification - CEO
Exhibit 31.2 Rule 13a-14(a) Certification - CFO
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350


(dollars in thousands)	June 27, 2020		December 28, 2019
Assets
Current:
Cash and cash equivalents	$	108,660	$	66,871
Marketable securities		97,256		63,538
SERP investment		19,230		18,935
Accounts receivable, net		48,541		55,764
Inventories		278,456		279,806
Prepaid expenses and other current assets		26,236		23,378
Total current assets		578,379		508,292
Property and equipment, net		887,285		886,928
Operating lease right-to-use		202,840		210,196
Goodwill		52,330		52,330
Intangible and other assets, net		18,296		17,816
Total assets	$	1,739,130	$	1,675,562

Liabilities
Current:
Accounts payable	$	181,088	$	180,718
Accrued expenses		35,778		39,528
Operating leases		38,048		39,114
Accrued self-insurance		17,282		15,719
Deferred revenue, net		6,244		8,662
Income taxes payable		32,878		8,197
Total current liabilities		311,318		291,938
Postretirement benefit obligations		21,822		22,143
Accrued self-insurance		17,616		17,625
Operating leases		172,970		179,654
Deferred income taxes		96,416		97,041
Other		7,641		8,416
Total liabilities		627,783		616,817
Shareholders’ Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued,
26,898,443 shares outstanding		9,949		9,949
Retained earnings		1,249,657		1,198,173
Accumulated other comprehensive income
(Net of deferred taxes of $1,026 in 2020 and $593 in 2019)		2,598		1,480
		1,262,204		1,209,602
Treasury stock at cost, 6,149,364 shares		(150,857)		(150,857)
Total shareholders’ equity		1,111,347		1,058,745
Total liabilities and shareholders’ equity	$	1,739,130	$	1,675,562


Registrant's telephone number, including area code: (570) 286-4571	Registrant's web address: www.weismarkets.com



	13 Weeks Ended				26 Weeks Ended
(dollars in thousands, except shares and per share amounts)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net sales	$	1,098,704	$	887,967	$	2,084,524	$	1,764,686
Cost of sales, including advertising, warehousing and distribution expenses		805,816		651,297		1,527,489		1,298,463
Gross profit on sales		292,888		236,670		557,035		466,223
Operating, general and administrative expenses		236,886		210,373		463,605		422,105
Income from operations		56,002		26,297		93,430		44,118
Investment income (loss) and interest expense		3,066		1,079		(953)		3,975
Other income (expense)		(2,618)		(428)		58		(2,270)
Income before provision for income taxes		56,450		26,948		92,535		45,823
Provision for income taxes		14,978		6,473		24,374		11,043
Net income	$	41,472	$	20,475	$	68,161	$	34,780

Weighted-average shares outstanding, basic and diluted		26,898,443		26,898,443		26,898,443		26,898,443
Cash dividends per share	$	0.31	$	0.31	$	0.62	$	0.62
Basic and diluted earnings per share	$	1.54	$	0.76	$	2.53	$	1.29



						Accumulated
(dollars in thousands, except shares)						Other						Total
For Thirteen Weeks Ended	Common Stock			Retained		Comprehensive		Treasury Stock				Shareholders’
June 27, 2020 and June 29, 2019	Shares	Amount		Earnings		Income (Loss)		Shares		Amount		Equity
Balance at March 28, 2020	33,047,807	$	9,949	$	1,216,524	$	1,569		6,149,364	$	(150,857)	$	1,077,185
Net Income	—		—		41,472		—		—		—		41,472
Other comprehensive income, net of
reclassification adjustments and tax	—		—		—		1,029		—		—		1,029
Dividends paid	—		—		(8,339)		—		—		—		(8,339)
Balance at June 27, 2020	33,047,807	$	9,949	$	1,249,657	$	2,598		6,149,364	$	(150,857)	$	1,111,347

Balance at March 30, 2019	33,047,807	$	9,949	$	1,169,510	$	883		6,149,364	$	(150,857)	$	1,029,485
Net income	—		—		20,475		—		—		—		20,475
Other comprehensive income, net of
reclassification adjustments and tax	—		—		—		454		—		—		454
Dividends paid	—		—		(8,339)		—		—		—		(8,339)
Balance at June 29, 2019	33,047,807	$	9,949	$	1,181,647	$	1,337		6,149,364	$	(150,857)	$	1,042,076



			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
June 27, 2020	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities							$	7,188
Level 2
Municipal bonds	$	86,445	$	4,535	$	(912)		90,068
	$	86,445	$	4,535	$	(912)	$	97,256



		Unrealized Gains
		on Available-for-Sale
(dollars in thousands)		Marketable Securities
Accumulated other comprehensive income balance as of December 28, 2019	$	1,480

Other comprehensive income before reclassifications		1,118
Amounts reclassified from accumulated other comprehensive income		-
Net current period change in other comprehensive income		1,118
Accumulated other comprehensive income balance as of June 27, 2020	$	2,598



		Amounts Reclassified from
		Accumulated Other Comprehensive Income to the
		Consolidated Statements of Income
		13 Weeks Ended				26 Weeks Ended
(dollars in thousands)	Location	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Unrealized gains (losses) on available-for-sale marketable securities
	Investment income (loss) and interest expense	$	8	$	-	$	-	$	-
	Provision for income taxes		(2)		-		-		-
Total amount reclassified, net of tax		$	6	$	-	$	-	$	-



Analysis of Consolidated Statements of Income
													Percentage Changes
	13 Weeks Ended						26 Weeks Ended						2020 vs. 2019			2020 vs. 2019
(dollars in thousands except per share amounts)	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019			13 Weeks Ended			26 Weeks Ended
Net sales	$	1,098,704		$	887,967		$	2,084,524		$	1,764,686			23.7	%		18.1	%
Cost of sales, including advertising, warehousing and distribution expenses		805,816			651,297			1,527,489			1,298,463			23.7			17.6
Gross profit on sales		292,888			236,670			557,035			466,223			23.8			19.5
Gross profit margin		26.7	%		26.7	%		26.7	%		26.4	%
Operating, general and administrative expenses		236,886			210,373			463,605			422,105			12.6			9.8
O, G & A, percent of net sales		21.6	%		23.7	%		22.2	%		23.9	%
Income from operations		56,002			26,297			93,430			44,118			113.0			111.8
Operating margin		5.1	%		3.0	%		4.5	%		2.5	%
Investment income and interest expense		3,066			1,079			(953)			3,975			184.2			(124.0)
Investment income and interest expense, percent of net sales		0.3	%		0.1	%		(0.0)	%		0.2	%
Other income (expense)		(2,618)			(428)			58			(2,270)			(511.7)			102.6
Other income (expense), percent of net sales		(0.2)	%		-	%		-	%		(0.1)	%
Income before provision for income taxes		56,450			26,948			92,535			45,823			109.5			101.9
Income before provision for income taxes, percent of net sales		5.1	%		3.0	%		4.4	%		2.6	%
Provision for income taxes		14,978			6,473			24,374			11,043			131.4			120.7
Effective income tax rate		26.5	%		24.0	%		26.3	%		24.1	%
Net income	$	41,472		$	20,475		$	68,161		$	34,780			102.5	%		96.0	%
Net income, percent of net sales		3.8	%		2.3	%		3.3	%		2.0	%
Basic and diluted earnings per share	$	1.54		$	0.76		$	2.53		$	1.29			102.6	%		96.1	%


A breakdown of the material increases (decreases) as a percent of sales in "Operating, general and administrative expenses" is as follows:

	13 Weeks Ended
(dollars in thousands)	Increase		Increase (Decrease)
June 27, 2020	(Decrease)		as a % of sales
Wages expense		18,232	(0.7)	%
Fixed expense		1,597	(0.8)
Utilities expense		(1,114)	(0.3)


	Exhibit 31.1 Rule a-14(a) Certification - CEO
	Exhibit 31.2 Rule 13a-14(a) Certification - CFO
	Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350


		WEIS MARKETS, INC.
		(Registrant)

Date:	8/5/2020	/S/Jonathan H. Weis
		Jonathan H. Weis
		Chairman,
		President and Chief Executive Officer
		(Principal Executive Officer)

Date:	8/5/2020	/S/Scott F. Frost
		Scott F. Frost
		Senior Vice President, Chief Financial Officer
		and Treasurer
		(Principal Financial Officer)


	26 Weeks Ended
(dollars in thousands)		June 27, 2020		June 29, 2019
Cash flows from operating activities:
Net income	$	68,161	$	34,780
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		47,794		46,324
Loss on disposition of fixed assets		1,858		806
Unrealized (gain) loss in value of equity securities		2,013		(848)
Deferred income taxes		(1,057)		(482)
Unrealized (gain) loss in SERP		383		(1,360)
Changes in operating assets and liabilities:
Inventories		1,351		14,413
Accounts receivable and prepaid expenses		4,365		10,762
Accounts payable and other liabilities		(6,302)		(29,423)
Income taxes		24,682		2,147
Other		(4,173)		487
Net cash provided by operating activities		139,075		77,606
Cash flows from investing activities:
Purchase of property and equipment		(49,731)		(44,335)
Proceeds from the sale of property and equipment		277		1,320
Purchase of marketable securities		(33,194)		(4,205)
Proceeds from the sale and maturities of marketable securities		2,675		2,785
Purchase of intangible assets		41		(540)
Change in SERP investment		(677)		(2,116)
Net cash used in investing activities		(80,609)		(47,091)
Cash flows from financing activities:
Dividends paid		(16,677)		(16,677)
Net cash used in financing activities		(16,677)		(16,677)
Net increase (decrease) in cash and cash equivalents		41,789		13,838
Cash and cash equivalents at beginning of year		66,871		37,808
Cash and cash equivalents at end of period	$	108,660	$	51,646


		Amortized		Fair
(dollars in thousands)		Cost		Value
Available-for-sale:
Due within one year	$	8,072	$	8,108
Due after one year through five years		33,173		34,491
Due after five years through ten years		45,200		47,469
	$	86,445	$	90,068


	13 Weeks Ended
(dollars in thousands)	June 27, 2020				June 29, 2019
Grocery	$	987,502	89.9	%	$	767,886	86.6	%
Pharmacy		85,808	7.8			84,682	9.5
Fuel		23,129	2.1			33,271	3.7
Manufacturing		2,265	0.2			2,128	0.2

Total net sales	$	1,098,704	100.0	%	$	887,967	100.0	%


	26 Weeks Ended
(dollars in thousands)	June 27, 2020				June 29, 2019
Grocery	$	1,851,249	88.9	%	$	1,534,787	87.0	%
Pharmacy		175,142	8.4			166,463	9.4
Fuel		53,096	2.5			59,736	3.4
Manufacturing		5,037	0.2			3,700	0.2

Total net sales	$	2,084,524	100.0	%	$	1,764,686	100.0	%