Press release shared by Ingles Markets, on Jan. 30:
ASHEVILLE — Ingles Markets, Inc., (NASDAQ: IMKTA) today reported an overall increase in sales of 5.2 percent to $918.2 million for its first fiscal quarter ending Dec. 24, 2011. For the December 2011 quarter, net income rose to $10.6 million compared with net income of $7.7 million for the quarter ending December 2010.
Commenting on the results, Robert P. Ingle, II, CEO, said, “We are pleased with our performance this past holiday season, leading to a good start for fiscal 2012.”
Financial Results
Net sales rose 5.2 percent to $918.2 million for the quarter ended Dec. 24, 2011, compared with $872.8 million for the quarter ended Dec. 25, 2010. For the comparable December 2011 and 2010 quarters and excluding gasoline sales, grocery segment comparable store sales increased 3.4 percent, average transaction size increased 1.3 percent, and weekly customer visits increased 2.0 percent.
Gross profit for the first quarter of fiscal 2012 rose 4.3 percent to $201.7 million, an increase of $8.2 million compared with the first quarter of fiscal 2011. Gross profit as a percentage of sales was 22 percent for the first quarter of fiscal 2012 compared with 22.2 percent for the first quarter of fiscal 2011. Grocery segment gross margins, excluding gasoline, also increased from 25.2 percent in the first quarter of fiscal 2011 to 25.5 percent for the current-year quarter. The improvement in gross margin benefitted from inflation and vendor participation in pricing promotions during the very competitive holiday season.
Total operating expenses were $171.8 million for the first quarter of fiscal 2012 compared with $167.3 million for the comparable fiscal 2011 quarter. Operating and administrative expenses as a percentage of sales, excluding gasoline sales and associated operating expenses, improved to 21.6 percent from 21.8 percent for the three months ended Dec. 24, 2011 and Dec. 25, 2010, respectively. The growth in operating expenses was comprised primarily of increases in repairs and depreciation, partially offset by decreased insurance expense.
Net rental income, gains/losses on asset disposals, and other income totaled approximately $1.5 million for both the December 2011 and 2010 quarters. There were no individually significant trends or transactions for either first fiscal quarter.
Interest expense decreased $0.9 million for the three-month period ended December 24, 2011, to $15.0 million from $15.9 million for the three-month period ended Dec. 25, 2010. The decrease in interest expense is attributable to lower interest rates and to capitalized interest. Total debt at Dec. 24, 2011, was $882.5 million compared to $784.5 million at Dec. 25, 2010. The increase in debt is primarily attributable to financing the construction of a new distribution facility scheduled to open during calendar year 2012. The company currently has lines of credit totaling $175.0 million with $44.2 million borrowed at Dec. 24, 2011. The company believes its financial resources, including these lines of credit and other internal and anticipated external sources of funds, will be sufficient to meet planned capital expenditures, debt service and working capital requirements for the foreseeable future.
Net income for the December 2011 quarter increased 38.5 percent to $10.6 million compared with net income of $7.7 million for the December 2010 quarter. Basic and diluted earnings per share for the company’s publicly traded Class A common stock were $0.45 and $0.43 per share, respectively, for the December 2011 quarter compared with $0.33 and $0.31 per share, respectively, for the December 2010 quarter.
Capital expenditures totaled $63.7 million for the three-month period ended Dec. 24, 2011. Most of these capital expenditures were related to construction of the new distribution facility and procurement of related equipment. Capital expenditures also included the costs of upgrading and replacing store equipment, technology investments, capital expenditures related to its milk processing plant, and expenditures for stores scheduled to open later in fiscal 2012 and in fiscal 2013.
Ingles’ capital expenditure plans for fiscal year 2012 include investments of approximately $120 million to $160 million. The majority of the company’s fiscal year 2012 capital expenditures are expected for the new distribution and warehouse facility. The number of new/replacement/remodeled stores completed in fiscal year 2012 will somewhat depend on the timing of distribution center expenditures.
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