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Ingles Markets, Incorporated Reports Fiscal 2017 Sales Top $4 Billion

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Company Reports Sales and Net Income for Fourth Quarter and Fiscal
Year 2017

Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported total sales
of $4.00 billion for fiscal year 2017 compared with $3.79 billion in
fiscal year 2016. For the fiscal years ended September 2017 and 2016,
net income totaled $53.9 million in 2017 compared with $54.2 million in
2016.

Total sales for the fourth quarter of fiscal 2017 were $1.09 billion
compared with $962.4 million for the fourth quarter of fiscal 2016. Net
income for the fourth quarter of fiscal 2017 totaled $19.4 million,
compared with net income of $14.2 million for the fourth quarter of
fiscal 2016.

The fiscal year and quarter ended September 2017 contained 53 weeks and
14 weeks, respectively. This is one extra week compared with the fiscal
year and quarter ended September 2016.

Commenting on the results, Robert P. Ingle II, Chairman of the Board,
said, "Our Company achieved strong results due to the hard work and
dedication of our associates. We will continue to bring our customers
products they desire and flawless service in our stores."

Fourth Quarter Results

Net sales totaled $1.09 billion for the quarter ended September 30,
2017, compared with $962.4 million for the comparable quarter in fiscal
2016. Comparable store sales increased 3.6%, excluding gasoline, and
adjusted to reflect the same number of weeks in each fourth quarter.
Hurricane activity provided a positive benefit in the current-year
quarter.

Gross profit for the fourth quarter of fiscal 2017 increased to $261.3
million, compared with $237.2 million for the fourth quarter of fiscal
2016. Gross profit as a percentage of sales was 24.0% and 24.7% for the
2017 and 2016 fourth quarters, respectively.

Operating and administrative expenses for the September 2017 quarter
totaled $220.2 million. Operating and administrative expenses as a
percentage of sales were 20.2% for the fourth quarter of fiscal 2017,
compared with $204.9 million or 21.3% of sales for the fourth quarter of
fiscal 2016. Labor cost increases represented most of the total
operating expense increase.

Interest expense totaled $12.7 million for the fourth quarter of fiscal
2017, compared with $11.9 million for the fourth quarter of fiscal 2016.
Total debt was $877.9 million at the end of fiscal 2017 compared with
$876.5 million at the end of fiscal 2016.

Net income for the September 2017 fourteen week quarter increased to
$19.4 million, compared with net income of $14.2 million for the
thirteen week September 2016 quarter. Basic and diluted earnings per
share for the Company's publicly traded Class A common stock were $0.99
and $0.96 per share, respectively, for the September 2017 quarter,
compared with $0.72 and $0.70 per share, respectively, for the September
2016 quarter.

Annual Results

Net sales were $4.00 billion for the fiscal year ended September 2017,
compared with $3.79 billion for the fiscal year ended September 2016.
Comparable store sales in fiscal year 2017 increased 1.5% over fiscal
2016, excluding gasoline, and adjusted to reflect the same number of
weeks in each fiscal year. The number of transactions and the average
transaction size were both higher in fiscal year 2017 compared with the
prior year.

Gross profit for the fiscal year ended September 30, 2017, increased
$39.2 million, or 4.2%, to $963.6 million, or 24.1% of sales, compared
with $924.4 million, or 24.4% of sales, for the fiscal year ended
September 24, 2016.

Operating expenses totaled $837.1 million in fiscal 2017, compared with
$794.6 million in fiscal 2016, and were 20.9% of sales for both fiscal
years 2017 and 2016. Labor cost increases represented most of the total
operating expense increase.

Gains on asset disposals totaled $1.5 million for fiscal 2017, compared
with losses of $1.2 million for fiscal 2016. During fiscal 2016, the
Company wrote off buildings demolished in advance of rebuilding new
stores in future periods.

Interest expense increased $1.1 million for the year ended September 30,
2017, to $47.4 million, compared with $46.3 million for the year ended
September 24, 2016. Interest rates on the Company's floating rate debt
increased during fiscal year 2017, while overall debt levels did not
change significantly over the past twelve months.

Income tax expense as a percentage of pre-tax income was 36.1% for
fiscal 2017 compared with 36.0% for fiscal 2016. There were no
individually significant tax items in either fiscal year.

Net income for fiscal 2017 totaled $53.9 million, compared with net
income of $54.2 million for fiscal 2016. Basic and diluted earnings per
share for the Company's publicly traded Class A common stock were $2.74
and $2.66 per share, respectively, for the year ended
September 30, 2017, compared with $2.75 and $2.68 per share,
respectively, for the year ended September 24, 2016.

Capital expenditures totaled $127.7 million and $137.6 million for
fiscal years 2017 and 2016, respectively. During fiscal 2017, the
Company opened two new store buildings and closed four stores, one of
which is being rebuilt and will reopen in December 2017. The Company's
other store improvement capital projects in fiscal 2017 focused on
improved merchandising, convenience and the range of products offered to
our customers.

The Company has a line of credit facility totaling $175.0 million with
$165.5 million available (after deducting letters of credit) at
September 30, 2017. The Company is in compliance with all of its debt
agreements and has significant unencumbered assets at September 30, 2017.

The comments in this press release contain certain forward-looking
statements.
Ingles undertakes no obligation to publicly release
any revisions to any forward-looking statements contained herein to
reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events, except as required by
law.
Ingles' actual results may differ materially from those
projected in forward-looking statements made by, or on behalf of,
Ingles. Factors that may affect results include changes in business and
economic conditions generally in Ingles' operating area, pricing
pressures, increased competitive efforts by others in Ingles' marketing
areas and the availability of financing for capital improvements. A more
detailed discussion of these factors may be found in reports filed by
the Company with the Securities and Exchange Commission including its
2017 Form 10-K and Forms 10-Q.

Ingles Markets, Incorporated is a leading supermarket chain with
operations in six southeastern states. Headquartered in Asheville, North
Carolina, the Company operates 199 supermarkets. In conjunction with
its supermarket operations, the Company operates neighborhood shopping
centers, most of which contain an Ingles supermarket. The Company also
owns a fluid dairy facility that supplies Company supermarkets
and unaffiliated customers. The Company's Class A Common Stock is traded
on The NASDAQ Stock Market's Global Select Market under the symbol
IMKTA. For more information, visit Ingles' website at www.ingles-markets.com.

 

 

INGLES MARKETS, INCORPORATED

(Amounts in thousands except per share data)

               
Financial Highlights
(Unaudited)
 
Quarter Ended Year Ended
Sept. 30, Sept. 24, Sept. 30, Sept. 24,

2017

(14 weeks)

2016

(13 weeks)

2017

(53 weeks)

2016

(52 weeks)

 
Net sales $ 1,089,392 $ 962,374 $ 4,002,700 $ 3,794,977
Gross profit 261,289 237,194 963,593 924,405
Operating and administrative expenses 220,230 204,941 837,145 794,595
(Loss)/gain from sale or disposal of assets (28 ) (274 ) 1,465 (1,208 )
Income from operations 41,031 31,979 127,913 128,602
Other income, net 1,337 710 3,807 2,362
Interest expense 12,696 11,937 47,458 46,330
Income taxes 10,300 6,569 30,388 30,445
Net income $ 19,372 $ 14,183 $ 53,874 $ 54,189
 
Basic earnings per common share – Class A $ 0.99 $ 0.72 $ 2.74 $ 2.75
Basic earnings per common share – Class B $ 0.90 $ 0.65 $ 2.49 $ 2.50
Diluted earnings per common share – Class A $ 0.96 $ 0.70 $ 2.66 $ 2.68
Diluted earnings per common share – Class B $ 0.90 $ 0.65 $ 2.49 $ 2.50
 
Additional selected information:
Depreciation and amortization expense $ 28,181 $ 27,244 $ 110,929 $ 106,588
Rent expense $ 3,263 $ 3,303 $ 13,607 $ 13,761
 
Consolidated Balance Sheets
 
Sept. 30, Sept. 24,

2017

2016

ASSETS
Cash and cash equivalents $ 23,912 $ 5,680
Receivables-net 66,329 61,735
Inventories 349,333 343,881
Other current assets 6,266 7,191
Property and equipment-net 1,265,112 1,247,882
Other assets   22,354     20,109
TOTAL ASSETS $ 1,733,306   $ 1,686,478
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt $ 12,211 $ 10,001

Accounts payable, accrued expenses and current portion of other
long-term liabilities

233,353 231,604
Deferred income taxes 69,918 71,449
Long-term debt 865,660 866,473
Other long-term liabilities   41,112     36,776
Total Liabilities 1,222,254 1,216,303
Stockholders' equity   511,052     470,175

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 1,733,306   $ 1,686,478
 

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