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As Of Filer Filing For·On·As Docs:Size 11/03/22 Weis Markets Inc. 10-Q 9/24/22 50:3.9M |
Document/Exhibit Description Pages Size
1: 10-Q Weis Markets, Inc. 10Q 03 2022 HTML 1.14M
2: EX-31.1 Weis Markets, Inc. 10Q 03 2022 Exhibit 31.1 HTML 20K
3: EX-31.2 Weis Markets, Inc. 10Q 03 2022 Exhibit 31.2 HTML 20K
4: EX-32 Weis Markets, Inc. 10Q 03 2022 Exhibit 32 HTML 17K
10: R1 Document and Entity Information HTML 68K
11: R2 Consolidated Balance Sheets HTML 121K
12: R3 Consolidated Balance Sheets (Parenthetical) HTML 26K
13: R4 Consolidated Statements of Income HTML 80K
14: R5 Consolidated Statements of Comprehensive Income HTML 38K
15: R6 Consolidated Statements of Comprehensive Income HTML 17K
(Parenthetical)
16: R7 Consolidated Statements of Shareholders' Equity HTML 58K
17: R8 Consolidated Statements of Cash Flows HTML 86K
18: R9 Consolidated Statements of Cash Flows HTML 19K
(Parenthetical)
19: R10 Significant Accounting Policies HTML 17K
20: R11 Current Relevant Accounting Standards HTML 26K
21: R12 Marketable Securities HTML 110K
22: R13 Accumulated Other Comprehensive Income HTML 30K
23: R14 Long-Term Debt HTML 17K
24: R15 Revenue Recognition HTML 67K
25: R16 Leases HTML 40K
26: R17 Taxes HTML 19K
27: R18 Significant Accounting Policies (Policies) HTML 19K
28: R19 Marketable Securities (Tables) HTML 104K
29: R20 Accumulated Other Comprehensive Income (Tables) HTML 25K
30: R21 Revenue Recognition (Tables) HTML 63K
31: R22 Leases (Tables) HTML 39K
32: R23 Marketable Securities - Investment Income (Loss) HTML 21K
(Details)
33: R24 Marketable Securities - Fair Value (Details) HTML 30K
34: R25 Marketable Securities - Amortized Cost (Details) HTML 30K
35: R26 Marketable Securities - Maturities (Details) HTML 40K
36: R27 Marketable Securities - SERP Investments (Details) HTML 19K
37: R28 Accumulated Other Comprehensive Income (Details) HTML 31K
38: R29 Long-Term Debt - General Information (Details) HTML 38K
39: R30 Long-Term Debt - Interest Expense (Details) HTML 17K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-Q
(Mark One)
i [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended i September 24, 2022
or
i [ ] | 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 i 1-5039
i WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)
| | |
i Pennsylvania |
| i 24-0755415 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
i 1000 S. Second Street | | |
i P. O. Box 471 | | i 17801-0471 |
i Sunbury, i Pennsylvania | | (Zip Code) |
(Address of principal executive offices) | | |
| |
Registrant’s telephone number, including area code: ( i 570) i 286-4571 | Registrant’s web address: www.weismarkets.com |
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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. i 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). i Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | |
Large accelerated filer [ ] | | i Accelerated filer [X] |
Non-accelerated filer [ ] | | Smaller reporting company i [ ] |
| | Emerging growth company i [ ] |
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 i [X]
Securities registered pursuant to section 12(b) of the act:
| | |
Title of each class | Trading symbol | Name of exchange on which registered |
i Common stock, no par value | i WMK | i New York Stock Exchange |
As of November 3, 2022, there were issued and outstanding i 26,898,443 shares of the registrant’s common stock.
WEIS MARKETS, INC.
FORM 10-Q |
| Page |
| | |
| | |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| 5 | |
| 6 | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 10 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | | 18 |
| 18 | |
| | |
| 19 | |
| 20 | |
| | |
| | |
| | |
WEIS MARKETS, INC.
PART I – FINANCIAL INFORMATION
ITEM I – FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(unaudited)
| | | | | | |
(amounts in thousands, except shares) |
|
| ||||
Assets | | | | | | |
Current: | | | | | | |
Cash and cash equivalents | | $ | i 144,603 | | $ | i 86,048 |
Marketable securities | | | i 171,136 | | | i 205,744 |
SERP investment | | | i 21,483 | | | i 27,059 |
Accounts receivable, net | | | i 53,406 | | | i 52,108 |
Inventories | | | i 300,087 | | | i 269,587 |
Prepaid expenses and other current assets | | | i 33,503 | | | i 31,112 |
Total current assets | | | i 724,218 | | | i 671,658 |
Property and equipment, net | | | i 963,498 | | | i 977,787 |
Operating lease right-to-use | | | i 181,722 | | | i 191,175 |
Goodwill | | | i 52,330 | | | i 52,330 |
Intangible and other assets, net | | | i 18,960 | | | i 17,525 |
Total assets | | $ | i 1,940,728 | | $ | i 1,910,475 |
| | | | | | |
Liabilities | | | | | | |
Current: | | | | | | |
Accounts payable | | $ | i 206,472 | | $ | i 218,774 |
Accrued expenses | | | i 52,540 | | | i 48,654 |
Operating leases | | | i 42,204 | | | i 39,940 |
Accrued self-insurance | | | i 18,739 | | | i 18,568 |
Deferred revenue, net | | | i 8,114 | | | i 11,901 |
Income taxes payable | | | i 16,608 | | | i 7,360 |
Total current liabilities | | | i 344,677 | | | i 345,197 |
Postretirement benefit obligations | | | i 23,842 | | | i 29,964 |
Accrued self-insurance | | | i 23,371 | | | i 23,400 |
Operating leases | | | i 149,019 | | | i 161,669 |
Deferred income taxes | | | i 110,006 | | | i 115,087 |
Other | | | i 8,724 | | | i 15,416 |
Total liabilities | | | i 659,639 | | | i 690,733 |
Shareholders’ Equity | | | | | | |
Common stock, no par value, i i 100,800,000 / shares authorized, i i 33,047,807 / shares issued, i i 26,898,443 / shares outstanding | | | i 9,949 | | | i 9,949 |
Retained earnings | | | i 1,429,453 | | | i 1,358,963 |
Accumulated
other comprehensive income | | | ( i 7,456) | | | i 1,687 |
| | | i 1,431,946 | | | i 1,370,599 |
Treasury stock at cost, i 6,149,364 shares | | | ( i 150,857) | | | ( i 150,857) |
Total shareholders’ equity | | | i 1,281,089 | | | i 1,219,742 |
Total liabilities and shareholders’ equity | | $ | i 1,940,728 | | $ | i 1,910,475 |
See accompanying notes to Consolidated Financial Statements.
1
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | | | | | | | | | | | |
| | | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
(amounts in thousands, except shares and per share amounts) | | | | | | | | | | ||||
Net sales | | $ | i 1,150,551 | | $ | i 1,063,452 | | $ | i 3,389,853 | | $ | i 3,117,141 | |
Cost of sales, including advertising, warehousing and distribution expenses | | | i 862,908 | | | i 780,320 | | | i 2,516,311 | | | i 2,285,428 | |
Gross profit on sales | | | i 287,643 | | | i 283,132 | | | i 873,542 | | | i 831,713 | |
Operating, general and administrative expenses | | | i 253,985 | | | i 244,164 | | | i 750,066 | | | i 715,353 | |
Income from operations | | | i 33,658 | | | i 38,968 | | | i 123,476 | | | i 116,360 | |
Investment income (loss) and interest expense | | | ( i 1,483) | | | i 608 | | | ( i 3,394) | | | i 4,360 | |
Other income (expense) | | | i 1,214 | | | ( i 401) | | | i 4,805 | | | ( i 3,007) | |
Income before provision for income taxes | | | i 33,389 | | | i 39,175 | | | i 124,887 | | | i 117,713 | |
Provision for income taxes | | | i 4,731 | | | i 10,668 | | | i 28,574 | | | i 31,479 | |
Net income | | $ | i 28,658 | | $ | i 28,507 | | $ | i 96,313 | | $ | i 86,234 | |
| | | | | | | | | | | | | |
Weighted-average shares outstanding, basic and diluted | | | i 26,898,443 | | | i 26,898,443 | | | i 26,898,443 | | | i 26,898,443 | |
Cash dividends per share | | $ | i 0.32 | | $ | i 0.31 | | $ | i 0.96 | | $ | i 0.93 | |
Basic and diluted earnings per share | | $ | i 1.07 | | $ | i 1.06 | | $ | i 3.58 | | $ | i 3.21 | |
See accompanying notes to Consolidated Financial Statements.
2
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
| | | | | | | | | | | | |
| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
(amounts in thousands) | | | | | | | | | ||||
Net income | | $ | i 28,658 | | $ | i 28,507 | | $ | i 96,313 | | $ | i 86,234 |
Other comprehensive income (loss) by component, net of tax: | | | | | | | | | | | | |
Available-for-sale marketable securities | | | | | | | | | | | | |
Unrealized holding gains (losses) arising during period | | | ( i 2,023) | | | ( i 103) | | | ( i 9,143) | | | ( i 683) |
Other comprehensive income gain (loss), net of tax | | | ( i 2,023) | | | ( i 103) | | | ( i 9,143) | | | ( i 683) |
Comprehensive income, net of tax | | $ | i 26,635 | | $ | i 28,404 | | $ | i 87,170 | | $ | i 85,551 |
See accompanying notes to Consolidated Financial Statements.
3
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | | | | |
(amounts in thousands, except shares) | | | | | | | | | | Other | | | | | | | Total | ||
For the Thirteen Weeks Ended | | Common Stock | | Retained | | Comprehensive | Treasury Stock | | Shareholders’ | ||||||||||
| Shares | | Amount | | Earnings | | Income (Loss) | Shares | | Amount | | Equity | |||||||
Balance at June 25, 2022 |
| i 33,047,807 | | $ | i 9,949 | | $ | i 1,409,403 | | $ | ( i 5,433) | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,263,062 |
Net Income | | — | | | — | | | i 28,658 | | | — | | — | | | — | | | i 28,658 |
Other comprehensive income (loss), net of tax | | — | | | — | | | — | | | ( i 2,023) | | — | | | — | | | ( i 2,023) |
Dividends paid | | — | | | — | | | ( i 8,608) | | | — | | — | | | — | | | ( i 8,608) |
Balance at September 24, 2022 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,429,453 | | $ | ( i 7,456) | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,281,089 |
| | | | | | | | | | | | | | | | | | | |
Balance at June 26, 2021 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,324,787 | | $ | i 2,706 | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,186,585 |
Net income | | — | | | — | | | i 28,507 | | | — | | — | | | — | | | i 28,507 |
Other comprehensive income (loss), net of tax | | — | | | — | | | — | | | ( i 103) | | — | | | — | | | ( i 103) |
Dividends paid | | — | | | — | | | ( i 8,339) | | | — | | — | | | — | | | ( i 8,339) |
Balance at September 25, 2021 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,344,956 | | $ | i 2,603 | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,206,651 |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | | | | |
(amounts in thousands, except shares) | | | | | | | | | | Other | | | | | | | Total | ||
For the Thirty-Nine Weeks Ended | | Common Stock | | Retained | | Comprehensive | | Treasury Stock | | Shareholders’ | |||||||||
| Shares | | Amount | | Earnings | | Income (Loss) | | Shares | | Amount | | Equity | ||||||
Balance at December 25, 2021 |
| i 33,047,807 | | $ | i 9,949 | | $ | i 1,358,963 | | $ | i 1,687 | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,219,742 |
Net Income | | — | | | — | | | i 96,313 | | | — | | — | | | — | | | i 96,313 |
Other comprehensive income (loss), net of tax | | — | | | — | | | — | | | ( i 9,143) | | — | | | — | | | ( i 9,143) |
Dividends paid | | — | | | — | | | ( i 25,823) | | | — | | — | | | — | | | ( i 25,823) |
Balance at September 24, 2022 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,429,453 | | $ | ( i 7,456) | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,281,089 |
| | | | | | | | | | | | | | | | | | | |
Balance at December 26, 2020 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,283,737 | | $ | i 3,286 | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,146,115 |
Net income | | — | | | — | | | i 86,234 | | | — | | — | | | — | | | i 86,234 |
Other comprehensive income (loss), net of tax | | — | | | — | | | — | | | ( i 683) | | — | | | — | | | ( i 683) |
Dividends paid | | — | | | — | | | ( i 25,016) | | | — | | — | | | — | | | ( i 25,016) |
Balance at September 25, 2021 | | i 33,047,807 | | $ | i 9,949 | | $ | i 1,344,956 | | $ | i 2,603 | | i 6,149,364 | | $ | ( i 150,857) | | $ | i 1,206,651 |
See accompanying notes to Consolidated Financial Statements.
4
WEIS MARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | | | | | | |
| | 39 Weeks Ended | | ||||
(amounts in thousands) | | | | | | ||
Cash flows from operating activities: | | | | | | | |
Net income | | $ | i 96,313 | | $ | i 86,234 | |
Adjustments to reconcile net income to | | | | | | | |
net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | | | i 77,604 | | | i 77,232 | |
(Gain) loss on disposition of fixed assets | | | ( i 2,481) | | | i 524 | |
Unrealized (gain) loss in value of equity securities | | | i 1,590 | | | i 463 | |
Deferred income taxes | | | ( i 1,711) | | | i 7,812 | |
Unrealized (gain) loss in SERP | | | i 6,082 | | | ( i 2,130) | |
Changes in operating assets and liabilities: | | | | | | | |
Inventories | | | ( i 30,499) | | | i 11,161 | |
Accounts receivable and prepaid expenses | | | ( i 3,689) | | | i 11,289 | |
Accounts payable and other liabilities | | | ( i 9,802) | | | ( i 20,868) | |
Income taxes | | | i 9,248 | | | i 10,164 | |
Other | | | ( i 344) | | | i 224 | |
Net cash provided by operating activities | | | i 142,311 | | | i 182,105 | |
Cash flows from investing activities: | | | | | | | |
Purchase of property and equipment | | | ( i 83,335) | | | ( i 118,156) | |
Proceeds from the sale of property and equipment | | | i 6,710 | | | i 5,856 | |
Purchase of marketable securities | | | ( i 267,106) | | | ( i 19,455) | |
Proceeds from the sale and maturities of marketable securities | | | i 287,124 | | | i 12,275 | |
Purchase of intangible assets | | | ( i 944) | | | ( i 165) | |
Proceeds from sale of intangible assets | | | i 125 | | | — | |
Change in SERP investment | | | ( i 507) | | | ( i 1,488) | |
Net cash used in investing activities | | | ( i 57,933) | | | ( i 121,133) | |
Cash flows from financing activities: | | | | | | | |
Dividends paid | | | ( i 25,823) | | | ( i 25,016) | |
Net cash used in financing activities | | | ( i 25,823) | | | ( i 25,016) | |
Net increase (decrease) in cash and cash equivalents | | | i 58,555 | | | i 35,956 | |
Cash and cash equivalents at beginning of year | | | i 86,048 | | | i 136,612 | |
Cash and cash equivalents at end of period | | $ | i 144,603 | | $ | i 172,568 | |
See accompanying notes to Consolidated Financial Statements. In the first thirty-nine weeks of 2022, there was $ i 21.7 million cash paid for income taxes compared to $ i 13.5 million in 2021 for the same period. Cash paid for interest related to long-term debt was $ i 24 thousand and $ i 24 thousand in the first thirty-nine weeks of 2022 and 2021, respectively.
5
WEIS MARKETS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Significant Accounting Policies
iBasis of Presentation: The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring deferrals and accruals) considered necessary for a fair presentation have been included. The operating results for the periods presented are not necessarily indicative of the results to be expected for the full year. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements and there were no material subsequent events which require additional disclosure. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s latest Annual Report on Form 10-K.
/
i(2) Current Relevant Accounting Standards
iThe Company regularly monitors recently issued accounting standards and assesses their applicability and impact. The Company believes that there are no accounting standard updates that have or will have a material or significant impact on the Company’s accounting policies.
/
i(3) Marketable Securities
The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets. FASB has established three levels of inputs that may be used to measure fair value:
Level 1Observable inputs such as quoted prices in active markets for identical assets or liabilities;
Level 2Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and
Level 3Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available. The Company’s bond and commercial paper portfolio is valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.
For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm which includes various third-party pricing services. These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.
The Company accrues interest on its bond and commercial paper portfolio throughout the life of each bond and commercial paper held. Dividends from the equity securities are recognized as received. Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment loss of $ i 261 thousand in the thirteen weeks ended September 24, 2022, which included an unrealized loss in equity securities of $ i 1.4 million. In the thirteen weeks ended September 25, 2021, the Company recognized investment income of $ i 215 thousand, which included an unrealized loss in equity securities of $ i 381 thousand. In the thirty-nine weeks ended September 24, 2022, the Company recognized investment income of $ i 1.4 million, which included an unrealized loss in equity securities of $ i 1.6 million. In the thirty-nine weeks ended September 25, 2021, the Company recognized investment income of $ i 1.4 million, which included unrealized losses in equity securities of $ i 463 thousand.
/6
Marketable securities, as of September 24, 2022 and December 25, 2021, consisted of:
i
| | | | | | | | | | | | |
| | | | | Gross | | Gross | | | | ||
(amounts in thousands) | | Amortized | | Unrealized | | Unrealized | | Fair | ||||
| Cost |
| Holding Gains |
| Holding Losses |
| Value | |||||
Available-for-sale: | | | | | | | | | | | | |
Level 1 | | | | | | | | | | | | |
Equity securities | | | | | | | | | | | $ | i 4,920 |
Level 2 | | | | | | | | | | | | |
Corporate and municipal bonds | | $ | i 149,483 | | $ | i 1,210 | | $ | ( i 11,426) | | | i 139,267 |
Commercial Paper | | | i 26,892 | | | i 57 | | | — | | | i 26,949 |
| | $ | i 176,375 | | $ | i 1,267 | | $ | ( i 11,426) | | $ | i 171,136 |
| | | | | | | | | | | | |
| | | | | Gross | | Gross | | | | ||
(amounts in thousands) | | Amortized | | Unrealized | | Unrealized | | Fair | ||||
| Cost |
| Holding Gains |
| Holding Losses |
| Value | |||||
Available-for-sale: | | | | | | | | | | | | |
Level 1 | | | | | | | | | | | | |
Equity securities | | | | | | | | | | | $ | i 6,509 |
Level 2 | | | | | | | | | | | | |
Corporate and municipal bonds | | $ | i 151,947 | | $ | i 4,753 | | $ | ( i 2,384) | | | i 154,315 |
Commercial Paper | | | i 44,931 | | | i 2 | | | ( i 13) | | | i 44,920 |
| | $ | i 196,878 | | $ | i 4,755 | | $ | ( i 2,397) | | $ | i 205,744 |
/
Maturities of marketable securities classified as available-for-sale at September 24, 2022, were as follows:
i
| | | | | | |
| | Amortized | | Fair | ||
(amounts in thousands) |
| Cost |
| Value | ||
Available-for-sale: | | | | | | |
Due within one year | | $ | i 59,607 | | $ | i 58,578 |
Due after one year through five years | | | i 72,343 | | | i 68,242 |
Due after five years through ten years | | | i 32,235 | | | i 28,611 |
Due after ten years | | | i 12,190 | | | i 10,785 |
| | $ | i 176,375 | | $ | i 166,216 |
/
SERP Investments
The Company also maintains a non-qualified supplemental executive retirement plan for certain of its associates which allows them to defer income to future periods. Participants in the plans earn a return on their deferrals based on mutual fund investments. The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans. Such investments are reported on the Company’s Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment loss of $ i 1.2 million in the thirteen weeks ended September 24, 2022, and investment income of $ i 401 thousand in the same period in 2021. The Company recognized investment loss of $ i 4.8 million and investment income of $ i 3.0 million in the thirty-nine weeks ended September 24, 2022, and September 25, 2021, respectively. The changes in the underlying liability to the associates are recorded in “Other income (expense).”
7
(4) Accumulated Other Comprehensive Income
All balances in accumulated other comprehensive income are related to available-for-sale marketable securities. The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.
i
| | | |
| | Unrealized Gains (Losses) | |
| | on Available-for-Sale | |
(amounts in thousands) |
| Marketable Securities | |
Accumulated other comprehensive income balance as of December 25, 2021 | | $ | i 1,687 |
| | | |
Other comprehensive income (loss) | | | ( i 9,143) |
Net current period other comprehensive income (loss) | | | ( i 9,143) |
Accumulated other comprehensive income balance as of September 24, 2022 | | $ | ( i 7,456) |
/
i(5) Long-Term Debt
On i September 1, 2016, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”), which was amended on September 29, 2021, and matures on i September 1, 2024. The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $ i 30.0 million with an additional discretionary amount available of $ i 70.0 million. As of September 24, 2022, the availability under the revolving credit agreement was $ i 25.5 million, net of $ i 4.5 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.
Interest expense related to long-term debt was $ i i 8 / thousand in each of the thirteen weeks ended September 24, 2022, and September 25, 2021. In each of the first thirty-nine weeks of 2022 and 2021, interest expense related to long-term debt totaled $ i i i 24 / / thousand.
/
i(6) Revenue Recognition
The Chief Operating Officer, the Company’s chief operating decision maker, analyzes store operational revenues by geographical area but each area offers customers similar products, has similar distribution methods, and is supported by centralized management processes. The Company’s operations are reported as a single reportable segment.
The following table represents net sales by type of product for the thirteen and thirty-nine weeks ended September 24, 2022, and September 25, 2021:
i
| | | | | | | | | | | |
| | 13 Weeks Ended | |||||||||
(amounts in thousands) | | | |||||||||
Grocery |
| $ | i 973,707 | | i 84.6 | % | $ | i 912,984 | | i 85.9 | % |
Pharmacy | | | i 107,366 | | i 9.3 | | | i 99,210 | | i 9.3 | |
Fuel | | | i 66,350 | | i 5.8 | | | i 49,262 | | i 4.6 | |
Manufacturing | | | i 3,128 | | i 0.3 | | | i 1,996 | | i 0.2 | |
Total net sales | | $ | i 1,150,551 | | i 100.0 | % | $ | i 1,063,452 | | i 100.0 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | 39 Weeks Ended | |||||||||
(amounts in thousands) | | | | ||||||||
Grocery | | $ | i 2,867,699 | | i 84.5 | % | $ | i 2,687,066 | | i 86.2 | % |
Pharmacy | | | i 317,564 | | i 9.4 | | | i 296,278 | | i 9.5 | |
Fuel | | | i 195,521 | | i 5.8 | | | i 127,460 | | i 4.1 | |
Manufacturing | | | i 9,069 | | i 0.3 | | | i 6,337 | | i 0.2 | |
Total net sales | | $ | i 3,389,853 | | i 100.0 | % | $ | i 3,117,141 | | i 100.0 | % |
/
8
(7) Leases
As of September 24, 2022, the Company leased approximately i 49% of its open store facilities under operating leases that expire at various dates through 2036, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from i 5 to i 20 years. Additionally, the Company has operating leases for certain transportation and other equipment.
The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”
The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen and thirty-nine weeks ended September 24, 2022, and September 25, 2021.
i
| | | | | | | | | | | | |
| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
(amounts in thousands) |
|
| | | | | | | ||||
Operating lease cost | | $ | i 11,978 | | $ | i 11,511 | | $ | i 35,633 | | $ | i 34,029 |
Variable lease cost | | | i 2,578 | | | i 2,812 | | | i 8,165 | | | i 8,060 |
Lease or sublease income | | | ( i 2,421) | | | ( i 2,530) | | | ( i 7,259) | | | ( i 7,453) |
Net lease cost | | $ | i 12,135 | | $ | i 11,793 | | $ | i 36,539 | | $ | i 34,636 |
/
i(8) Taxes
The Company reduced its provision for income taxes by $ i 5.6 million for the period ended September 24, 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022. The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031, updating market sourcing rules, and codifying the economic nexus standard.
The Company’s effective income tax rate was i 14.2% and i 27.2% for the thirteen weeks ended September 24, 2022 and September 25, 2021, respectively. The Company’s effective income tax rate was i 22.9% and i 26.7% for the thirty-nine weeks ended September 24, 2022 and September 25, 2021, respectively. The effective income tax rate differed from the federal statutory rate, primarily due to the effect of state taxes, net of permanent differences.
/
9
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of Weis Markets, Inc.’s (the “Company”) financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q, the Company’s audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 25, 2021, filed with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned "Forward-Looking Statements" immediately following this analysis.
Company Summary
Weis Markets is a conventional supermarket chain that operates 197 retail stores with over 23 thousand associates located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia and West Virginia. Its products include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel and general merchandise items, such as health and beauty care and household products. The store product selection includes national, local and private brands.
The Company advertises its products and promotes its brand through digital and printed circulars; radio ads; e-mail blasts; and on-line via its web site, social media and mobile applications. The Company promotes by using Everyday Lower Price; Low Price Guarantee; Low, Low Price; 3 Day Sale; senior and military discounts; and Loyalty programs. The Loyalty program includes reward points that may be redeemed for discounts on items in store, at the Company’s fuel stations or one of its third-party fuel station partners.
Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 63% of product with the remaining being supplied by direct store delivery vendors. In addition, the Company has three manufacturing facilities which process milk, ice cream and fresh meat products. The corporate offices are located in Sunbury, PA where the Company was founded in 1912.
On March 11, 2020, the World Health Organization declared that the novel coronavirus (COVID-19) had become a pandemic, and on March 13, the U.S. President declared a National Emergency concerning the disease. This resulted in government mandated shutdowns, as well as multiple legislative acts to provide emergency economic assistance for individuals, families and businesses affected by the novel coronavirus pandemic. These events were accretive to our sales and gross profits compared to the time periods preceding the impact of the novel coronavirus pandemic. The Company is not able to speculate how the ensuing economy or unknown future related expenses will affect it after the governmental novel coronavirus pandemic measures have ended.
The Company continues to innovate and remain relevant to industry trends and offering customer convenience by presenting programs like “Weis 2 Go Online” ordering with curbside pickup and home delivery. As of September 24, 2022, the Company offered Weis 2 Go Online curbside pickup in 188 of its locations as well as home delivery with Shipt in 176 locations. In September 2021, the Company announced a partnership with DoorDash to offer on-demand grocery delivery, which is currently available in 189 locations. Total Ecommerce sales were $51.3 million in the first thirty-nine weeks of 2022 compared to $57.2 million in the same period in 2021, a decrease of 10.3 percent. When compared to the first thirty-nine weeks of 2020 total Ecommerce sales have increased 3.3 percent.
10
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Two-Year Stacked Comparable Store Sales Analysis
Management is providing Comparable Store Sales Two-Year Stacked analysis, a non-GAAP measure, because management believes this metric is useful to investors and analysts. A Comparable Store Sales Two-Year Stacked analysis presents a comparison of results and trends over a longer period of time to demonstrate the effect of the novel coronavirus pandemic on the operating results of the Company. Information presented in the tables below is not intended for use as an alternative to any other measure of performance. It is not recommended that this table be considered a substitute for the Company’s operating results as reported in accordance with GAAP.
Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to significant fluctuations caused by the novel coronavirus pandemic management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis. The following tables provide the two-year stacked comparable store sales, including and excluding fuel, for the periods ended September 24, 2022, and September 25, 2021, as well as periods ended September 25, 2021, and September 26, 2020, respectively. Comparable store sales increased 7.9 percent on an individual year-over-year basis and increased 12.5 percent on a two-year stacked basis for the thirteen weeks ended September 24, 2022 following the increase of 14.8 percent for the same period in 2020. Comparable store sales increased 8.6 percent on an individual year-over-year basis and increased 8.5 percent on a two-year stacked basis in the thirty-nine weeks ended September 24, 2022 following the increase of 17.3 percent for the same period in 2020.
| | | | | | | |
| | Percentage Change | |||||
| | 13 Weeks Ended | |||||
| | | 2022 vs. 2021 | | | 2021 vs. 2020 | |
Comparable store sales (individual year) | | | 7.9 | % | | 4.6 | % |
Comparable store sales (two-year stacked) | | | 12.5 | | | | |
Comparable store sales, excluding fuel (individual year) | | | 6.7 | | | 3.2 | % |
Comparable store sales, excluding fuel (two-year stacked) | | | 9.9 | % | | | |
| | | | | | | |
| | Percentage Change | |||||
| | 39 Weeks Ended | |||||
| | | 2022 vs. 2021 | | | 2021 vs. 2020 | |
Comparable store sales (individual year) | | | 8.6 | % | | (0.1) | % |
Comparable store sales (two-year stacked) | | | 8.5 | | | | |
Comparable store sales, excluding fuel (individual year) | | | 6.8 | | | (1.4) | % |
Comparable store sales, excluding fuel (two-year stacked) | | | 5.4 | % | | | |
When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.
11
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Results of Operations
Analysis of Consolidated Statements of Income
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Percentage Change | | |||
| | 13 Weeks Ended | | 39 Weeks Ended | | 13 Weeks Ended | | | 39 Weeks Ended | | |||||||||
(amounts in thousands, except per share amounts) | | | | | | | | | | | 2022 vs. 2021 | | | 2022 vs. 2021 | | ||||
Net sales | | $ | 1,150,551 | | $ | 1,063,452 | | $ | 3,389,853 | | $ | 3,117,141 | | | 8.2 | % | | 8.7 | % |
Cost of sales, including advertising, warehousing and distribution expenses | | | 862,908 | | | 780,320 | | | 2,516,311 | | | 2,285,428 | | | 10.6 | | | 10.1 | |
Gross profit on sales | | | 287,643 | | | 283,132 | | | 873,542 | | | 831,713 | | | 1.6 | | | 5.0 | |
Gross profit margin | | | 25.0 | % | | 26.6 | % | | 25.8 | % | | 26.7 | % | | | | | | |
Operating, general and administrative expenses | | | 253,985 | | | 244,164 | | | 750,066 | | | 715,353 | | | 4.0 | | | 4.9 | |
O, G & A, percent of net sales | | | 22.1 | % | | 23.0 | % | | 22.1 | % | | 22.9 | % | | | | | | |
Income from operations | | | 33,658 | | | 38,968 | | | 123,476 | | | 116,360 | | | (13.6) | | | 6.1 | |
Operating margin | | | 2.9 | % | | 3.7 | % | | 3.6 | % | | 3.7 | % | | | | | | |
Investment income (loss) and interest expense | | | (1,483) | | | 608 | | | (3,394) | | | 4,360 | | | (343.9) | | | (177.8) | |
Investment income (loss) and interest expense, percent of net sales | | | (0.1) | % | | 0.1 | % | | (0.1) | % | | 0.1 | % | | | | | | |
Other income (expense) | | | 1,214 | | | (401) | | | 4,805 | | | (3,007) | | | 402.7 | | | 259.8 | |
Other income (expense), percent of net sales | | | 0.1 | % | | (0.0) | % | | 0.1 | % | | (0.1) | % | | | | | | |
Income before provision for income taxes | | | 33,389 | | | 39,175 | | | 124,887 | | | 117,713 | | | (14.8) | | | 6.1 | |
Income before provision for income taxes, percent of net sales | | | 2.9 | % | | 3.7 | % | | 3.7 | % | | 3.8 | % | | | | | | |
Provision for income taxes | | | 4,731 | | | 10,668 | | | 28,574 | | | 31,479 | | | (55.7) | | | (9.2) | |
Effective income tax rate | | | 14.2 | % | | 27.2 | % | | 22.9 | % | | 26.7 | % | | | | | | |
Net income | | $ | 28,658 | | $ | 28,507 | | $ | 96,313 | | $ | 86,234 | | | 0.5 | % | | 11.7 | % |
Net income, percent of net sales | | | 2.5 | % | | 2.7 | % | | 2.8 | % | | 2.8 | % | | | | | | |
Basic and diluted earnings per share | | $ | 1.07 | | $ | 1.06 | | $ | 3.58 | | $ | 3.21 | | | 0.9 | % | | 11.5 | % |
Net Sales
Individual Year-Over-Year Analysis of Sales
| | | | | | |
| | Percentage Change | ||||
| | 2022 vs. 2021 | ||||
| 13 Weeks Ended | | 39 Weeks Ended | | ||
Net sales |
| 8.2 | % | | 8.7 | % |
Net sales, excluding fuel | | 6.9 | | | 6.8 | |
Comparable store sales | | 7.9 | | | 8.6 | |
Comparable store sales, excluding fuel | | 6.7 | % | | 6.8 | % |
When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.
12
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
According to the latest U.S. Bureau of Labor Statistics’ report, the Seasonally Adjusted Food-at-Home Consumer Price Index increased 2.8% and 2.3% for the thirteen week periods ended September 24, 2022 and September 25, 2021, respectively. The Seasonally Adjusted Food-at-Home Consumer Price Index increased 10.6% and 4.2% for thirty-nine week periods ended September 24, 2022 and September 25, 2021, respectively. Even though the U.S. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results. According to the U.S. Department of Energy, the average price of gasoline in the Central Atlantic States increased 32.7% or $1.08 per gallon in the thirteen weeks ended September 24, 2022, compared to the same period in 2021. The average price of gasoline in the Central Atlantic States increased 40.6% or $1.24 per gallon in the first thirty-nine weeks of 2022 when compared to the same period in 2021.
Total net sales increased 8.2% to $1.2 billion for the thirteen weeks ended September 24, 2022, from $1.1 billion for the thirteen weeks ended September 25, 2021. In the thirty-nine weeks ended September 24, 2022, total net sales increased 8.7% to $3.4 billion from $3.1 billion. The increase in total net sales includes retail price inflation in grocery, fuel and fresh product categories. Comparable store sales for the thirteen weeks ended September 24, 2022, compared to the same period in 2021 increased 7.9% including fuel and 6.7% excluding fuel. Comparable store sales for the thirty-nine weeks ended September 24, 2022, compared to the same period in 2021 increased 8.6% including fuel and 6.8% excluding fuel.
Although the Company experienced retail inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary indicators in the food retail industry. Management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors. Management remains confident in its ability to generate long-term sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company’s competitive position.
Cost of Sales and Gross Profit
Cost of sales consists of direct product costs (net of discounts and allowances), net advertising costs, distribution center and transportation costs, as well as manufacturing facility operations.
Gross profit on sales increased 1.6% and 5.0% for the thirteen and thirty-nine weeks ended September 24, 2022, compared to the same period in 2021. Gross profit margin decreased 1.6% and 0.9% for the thirteen and thirty-nine weeks ended September 24, 2022, compared to the same period in 2021. The Company experienced degradation in its gross profit margin as product costs increased in the fresh meats and pharmacy departments and lower margin departments, such as fuel, increased in the product mix.
Non-cash LIFO inventory valuation adjustments represent expense of $11.8 million in the first thirty-nine weeks of 2022 compared to expense of $2.0 million in the same period in 2021. Although the Company experienced cost inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary indicators in the food retail industry.
13
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Operating, General and Administrative Expenses
The majority of the operating, general and administrative expenses are driven by sales volume.
Employee expenses such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 61.0% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor decreased 0.3% in the thirteen and thirty-nine weeks ended September 24, 2022 when compared to the same period in 2021, respectively.
Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $23.7 million, or 2.1% of net sales during the thirteen weeks ended September 24, 2022 compared to $23.6 million, or 2.2% of net sales during the thirteen weeks ended September 25, 2021. During the first thirty-nine weeks of 2022 and 2021, depreciation and amortization expense charged to “Operating, general and administrative expenses” was $70.6 million, or 2.1% of net sales and $70.6 million, or 2.3% of net sales, respectively. See the Liquidity and Capital Resources section for further information regarding the Company’s capital expenditure program.
| | | | | | |
A breakdown of the material increases (decreases) as a percent of sales in "Operating, general and administrative expenses" is as follows: | ||||||
| | | | | | |
| | 13 Weeks Ended | | |||
(amounts in thousands) | | Increase | | Increase (Decrease) | | |
| (Decrease) | | as a % of sales | | ||
Employee expenses | | $ | 6,410 | | (0.5) | % |
Fixed expense (amortization, depreciation, insurance expenses, and occupancy costs) | | | (2,060) | | (0.5) | |
Utilities expense | | | 3,178 | | 0.2 | |
Other expenses (financial service fees, technology, repairs and maintenance, supplies) | | | 2,294 | | (0.1) | |
| | | | | | |
| | | | | | |
| | 39 Weeks Ended | | |||
(amounts in thousands) | | Increase | | Increase (Decrease) | | |
| (Decrease) | | as a % of sales | | ||
Employee expenses | | $ | 17,532 | | (0.6) | % |
Fixed expense (amortization, depreciation, insurance expenses, and occupancy costs) | | | 603 | | (0.3) | |
Utilities expense | | | 9,354 | | 0.2 | |
Other expenses (financial service fees, technology, repairs and maintenance, supplies) | | | 7,224 | | (0.1) | |
Overall, the operating, general and administrative expenses as a percent of sales presented for the thirteen and thirty-nine weeks ended September 24, 2022 have benefited in comparison with the 2021 percent of sales due to the increase in sales. Although employee and fixed expenses have increased from a cost perspective, the increase in sales has caused a decrease in the percent of sales rate.
Provision for Income Taxes
The Company reduced its provision for income taxes by $5.6 million for the period ended September 24, 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022. The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031, updating market sourcing rules, and codifying the economic nexus standard.
The Company’s effective income tax rate was 14.2% and 27.2% for the thirteen weeks ended September 24, 2022 and September 25, 2021, respectively. The Company’s effective income tax rate was 22.9% and 26.7% for the thirty-nine weeks ended September 24, 2022 and September 25, 2021, respectively. The effective income tax rate differed from the federal statutory rate, primarily due to the effect of state taxes, net of permanent differences.
14
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Liquidity and Capital Resources
The primary source of cash is cash flows generated from operations. In addition, the Company has access to a revolving credit agreement entered into on September 1, 2016, and amended on September 29, 2021, with Wells Fargo Bank, NA (the “Credit Agreement”). The Credit Agreement matures on September 1, 2024, and provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of September 24, 2022, the availability under the revolving credit agreement was $25.5 million with $4.5 million of letters of credit outstanding. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.
The Company’s investment portfolio consists of high-grade bonds and commercial paper with maturity dates between one and 20 years and four high yield, large capitalized public company equity securities. The portfolio totaled $171.1 million as of September 24, 2022. Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.
The Company’s capital expenditure program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet. Management currently plans to invest approximately $110 million in its capital expenditure program in 2022. The Company is experiencing limited availability of raw materials and equipment to complete remodels, supply chain and information technology upgrades, and smaller store improvement projects.
The Company expects that cash generated from operations and cash available under the Credit Agreement will fund its working capital requirements, debt requirements, capital expenditure program, acquisitions and dividends. The Company has no other commitment of capital resources as of September 24, 2022, other than the lease commitments on its store facilities and transportation equipment under operating leases that expire at various dates through 2036.
The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares.
Quarterly Cash Dividends
At its regular meeting held in October, the Board of Directors declared a quarterly dividend of $0.34 per share, payable on November 21, 2022, to shareholders of record on November 7, 2022. The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors reconsiders the declaration of dividends quarterly. The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments and the amount of the dividends depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant.
15
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Cash Flow Information
| | | | | | | | | |
| | 39 Weeks Ended | | | | ||||
(amounts in thousands) | | | | | | | 2022 vs. 2021 | ||
Net cash provided by (used in): | | | | | | | | | |
Operating activities | | $ | 142,311 | | $ | 182,105 | | $ | (39,794) |
Investing activities | | | (57,933) | | | (121,133) | | | 63,200 |
Financing activities | | | (25,823) | | | (25,016) | | | (807) |
Operating
Cash flows from operating activities decreased $39.8 million in the first thirty-nine weeks of 2022 compared to the first thirty-nine weeks of 2021. The decrease in cash flow from operating activities is primarily due to increased product costs in inventory, which is the result of the recent inflationary pressures in the food retail industry in the first thirty-nine weeks of 2022 when compared to the same period in 2021.
Investing
In the first thirty-nine weeks of 2022, when compared to the same period in 2021, the purchase of property and equipment decreased $34.8 million and the proceeds from the sale and maturities of marketable securities exceeded the purchase of marketable securities by $27.2 million. Additionally, as a percent of sales, capital expenditures were 2.5% in the first thirty-nine weeks of 2022 and 3.8% in the first thirty-nine weeks of 2021. The decrease as a percent of sales in 2022 compared to 2021 is due to the increase in sales as well as a decrease in spend resulting from limited availability of raw materials and equipment to complete remodels, supply chain and information technology upgrades, and smaller store improvement projects. For the remainder of 2022, management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.
Financing
The Company paid dividends of $25.8 million and $25.0 million in the first thirty-nine weeks of 2022 and 2021, respectively.
16
WEIS MARKETS, INC.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Accounting Policies and Estimates
The Company has chosen accounting policies that it believes are appropriate to accurately and fairly report its operating results and financial position, and the Company applies those accounting policies in a consistent manner. The Significant Accounting Policies are summarized in Note 1 to the Consolidated Financial Statements included in the 2021 Annual Report on Form 10-K. There have been no changes to the Significant Accounting Policies since the Company filed its Annual Report on Form 10-K for the fiscal year ended December 25, 2021.
Forward-Looking Statements
In addition to historical information, this Form 10-Q Report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. For example, risks and uncertainties can arise with changes in: competitive and reputational risks; financial, investment and infrastructure risks; information security, cybersecurity and data privacy risks; supply chain and third-party risks; risks created by pandemics (including the ongoing COVID-19 outbreak and the related responses of governments, consumers, customers, suppliers and employees); and legal, regulatory and other external risks. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.
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WEIS MARKETS, INC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative Disclosure - There have been no material changes in the Company’s market risk during the fiscal quarter ended September 24, 2022. Quantitative information is set forth in Item 7a on the Company’s Annual Report on Form 10-K under the caption “Quantitative and Qualitative Disclosures About Market Risk,” which was filed for the fiscal year ended December 25, 2021, and is incorporated herein by reference.
Qualitative Disclosure - This information is set forth in the Company’s Annual Report on Form 10-K under the caption “Liquidity and Capital Resources,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed for the fiscal year ended December 25, 2021, and is incorporated herein by reference.
ITEM 4. CONTROLS AND PROCEDURES
The Chief Executive Officer and the Chief Financial Officer, together with the Company’s Disclosure Committee, evaluated the Company’s disclosure controls and procedures as of the fiscal quarter ended September 24, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports was accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In connection with the evaluation described above, there was no change in the Company’s internal control over financial reporting during the fiscal quarter ended September 24, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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WEIS MARKETS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | |
| | | WEIS MARKETS, INC. |
| | | (Registrant) |
| | | |
Date: | 11/3/2022 | | |
| | | |
| | | Chairman, |
| | | President and Chief Executive Officer |
| | | (Principal Executive Officer) |
| | | |
Date: | 11/3/2022 | | |
| | | |
| | | Senior Vice President, Chief Financial Officer |
| | | and Treasurer |
| | | (Principal Financial Officer) |
20
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 9/1/24 | ||||
| 11/21/22 | ||||
| 11/7/22 | ||||
| Filed on: | 11/3/22 | |||
| For Period end: | 9/24/22 | |||
| 7/8/22 | ||||
| 6/25/22 | 10-Q | |||
| 12/25/21 | 10-K | |||
| 9/29/21 | 8-K | |||
| 9/25/21 | 10-Q | |||
| 6/26/21 | 10-Q | |||
| 12/26/20 | 10-K | |||
| 9/26/20 | 10-Q | |||
| 3/11/20 | ||||
| 9/1/16 | 8-K | |||
| List all Filings | ||||