What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-08-08 · 73 added, 165 removed, 312 unchanged (43% of the section changed)

25 unchanged sentences

Noncurrent operating lease liabilities

Noncurrent finance lease liabilities

Noncurrent operating finance liabilities

Other Long-Term Liabilities

Total Liabilities

1,014,873,593

Stockholders’ Equity

Preferred stock, $ 0.05 par value per share;

Preferred stock, $ 0.05 par value;

10,000,000 shares authorized;

1 unchanged sentence

Common stocks:

Class A, $ 0.05 par value per share;

Class A, $ 0.05 par value;

150,000,000 shares authorized;

‎ 14,544,925 shares issued and outstanding June 29, 2024;

‎ 14,545,750 shares issued and outstanding December 28, 2024;

‎ 14,544,925 shares issued and outstanding at September 28, 2024

Class B, convertible to Class A, $ 0.05 par value per share;

Class B, convertible to Class A, $ 0.05 par value;

‎ 100,000,000 shares authorized;

‎ 4,449,451 shares issued and outstanding June 29, 2024;

‎ 4,448,626 shares issued and outstanding December 28, 2024;

‎ 4,449,451 shares issued and outstanding at September 28, 2024

18 unchanged sentences

1,132,260,751

1,095,767,991

Operating and administrative expenses

5 unchanged sentences

Income tax expense

Other comprehensive (loss) income:

Change in fair value of interest rate swap

Income tax benefit (expense)

Other comprehensive (loss) income, net of tax

Comprehensive income

Per share amounts:

Class A Common Stock

Basic earnings per common share

Diluted earnings per common share

Class B Common Stock

Basic earnings per common share

Diluted earnings per common share

Cash dividends per common share

Class A Common Stock

Class B Common Stock

See notes to unaudited condensed consolidated financial statements.

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Nine Months Ended

4,242,080,604

4,307,786,852

Cost of goods sold

3,241,636,263

3,272,591,387

1,000,444,341

1,035,195,465

Operating and administrative expenses

Gain from sale or disposal of assets

Income from operations

Other income, net

Interest expense

Income before income taxes

Income tax expense

Other comprehensive loss:

Other comprehensive income (loss):

Change in fair value of interest rate swap

( 5,067,556 )

( 1,656,936 )

Income tax benefit

Other comprehensive loss, net of tax

( 2,950,695 )

Income tax (expense) benefit

Other comprehensive income (loss), net of tax

( 3,829,556 )

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE AND NINE MONTHS ENDED JUNE 29, 2024 AND JUNE 24, 2023

THREE MONTHS ENDED DECEMBER 28, 2024 AND DECEMBER 30, 2023

Comprehensive

Income (Loss)

(Loss) Income

Balance, September 30, 2023

11 unchanged sentences

1,495,469,572

Other comprehensive loss, net of income tax

( 2,019,226 )

Cash dividends

( 3,064,960 )

Common stock conversions

Balance, March 25, 2023

1,350,019,660

1,360,206,197

Other comprehensive income, net of income tax

Cash dividends

( 3,064,961 )

Common stock conversions

Balance, June 24, 2023

1,395,214,242

1,407,318,576

Balance, September 28, 2024

1 unchanged sentence

1,545,749,090

Other comprehensive loss, net of income tax

( 3,829,556 )

Cash dividends

( 3,066,613 )

Common stock conversions

Balance, December 30, 2023

1,485,115,778

1,495,469,572

Other comprehensive income, net of income tax

3 unchanged sentences

Common stock conversions

Balance, March 30, 2024

1,513,947,204

1,525,442,469

Other comprehensive loss, net of income tax

Cash dividends

( 3,067,208 )

Common stock conversions

Balance, June 29, 2024

Balance, December 28, 2024

1,551,582,749

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

Three Months Ended

Cash Flows from Operating Activities:

4 unchanged sentences

( 3,146,202 )

( 1,493,484 )

Receipt of advance payments on purchases contracts

Recognition of advance payments on purchases contracts

( 2,200,032 )

( 2,194,407 )

Receipt of advance payments on purchase contracts

Recognition of advance payments on purchase contracts

Deferred income taxes

( 1,379,000 )

( 3,907,000 )

Changes in operating assets and liabilities:

9 unchanged sentences

( 38,672,293 )

Net Cash Provided by Operating Activities

Net Cash (Used) Provided by Operating Activities

( 43,647,293 )

Cash Flows from Investing Activities:

Purchase of short term investments

Proceeds from sales of property and equipment

16 unchanged sentences

( 6,659,455 )

Net Increase in Cash and Cash Equivalents

Net Decrease in Cash and Cash Equivalents

( 84,178,152 )

( 53,505,942 )

Cash and cash equivalents at beginning of period

2 unchanged sentences

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS

Three Months and Nine Months Ended June 29, 2024 and June 24, 2023

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

Three Months Ended December 28, 2024 and December 30, 2023

BASIS OF PREPARATION

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position as of June 29, 2024 and the results of operations and changes in stockholders’ equity for the three-month and nine-month periods ended June 29, 2024 and June 24, 2023, and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the nine months ended June 29, 2024 and June 24, 2023.

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position as of December 28, 2024, and the results of operations, changes in stockholders’ equity and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the three months ended December 28, 2024 and December 30, 2023.

The adjustments made are of a normal recurring nature.

Certain information and footnote disclosures included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q.

It is suggested that these unaudited interim financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended September 30, 2023, filed by the Company under the Securities Exchange Act of 1934, on November 29, 2023 .

The results of operations for the three-month and nine-month periods ended June 29, 2024 are not necessarily indicative of the results to be expected for the full fiscal year.

It is suggested that these unaudited interim financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended September 28, 2024, filed by the Company under the Securities Exchange Act of 1934, on December 27, 2024.

The results of operations for the three months ended December 28, 2024 are not necessarily indicative of the results to be expected for the full fiscal year.

NEW ACCOUNTING PRONOUNCEMENTS

In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848):

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .” The ASU provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting in response to the risk of cessation of the London Interbank Offered Rate (“LIBOR”).

14 unchanged sentences

The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) , which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The new guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The requirements apply prospectively with the option for retrospective application.

The Company is currently evaluating the impact that the adoption of this accounting standard will have on the Company’s Consolidated Financial Statements.

SHORT TERM INVESTMENTS

3 unchanged sentences

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Receivables are presented net of an allowance for doubtful accounts of $ 395,137 at June 29, 2024 and $ 143,753 at September 30, 2023.

Receivables are presented net of an allowance for doubtful accounts of $ 483,853 at December 28, 2024 and $ 474,684 at September 28, 2024.

The Company’s effective tax rate differs from the federal statutory rate primarily as a result of state income taxes and tax credits.

10 unchanged sentences

The Company is currently insured for covered costs in excess of $ 1.0 million per occurrence for workers’ compensation and for general liability and $ 500,000 per covered person for medical care benefits for a policy year.

The Company’s self-insurance reserves totaled $ 34.5 million at June 29, 2024.

Of this amount, $ 15.7 million was accounted for as a current liability and $ 18.8 million as a long-term liability, which included $ 4.1 million of expected self-insurance recoveries from excess cost insurance or other sources that were recorded as a receivable.

At September 30, 2023, the Company’s self-insurance reserves totaled $ 32.9 million of which $ 14.0 million was accounted for as a current liability and $ 18.9 million as a long-term liability, which included $ 4.3 million of expected self-insurance recoveries from excess cost insurance or other sources that were recorded as a receivable.

Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 9.4 million and $ 8.6 million for the three-month periods ended June 29, 2024 and June 24, 2023, respectively.

For the nine-month periods ended June 29, 2024 and June 24, 2023, employee insurance expense, net of employee contributions totaled $ 31.9 million and $ 27.5 million, respectively.

The Company’s self-insurance reserves totaled $ 36.7 million at December 28, 2024.

Of this amount, $ 16.6 million was accounted for as a current liability and $ 20.1 million as a long-term liability, which included $ 4.0 million of expected self-insurance recoveries from excess cost insurance or other sources that was recorded as a receivable.

At September 28, 2024, the Company’s self-insurance reserves totaled $ 35.9 million, of which $ 16.5 million was accounted for as a current liability and $ 19.4 million as a long-term liability, which included $ 4.1 million of expected self-insurance recoveries from excess cost insurance or other sources that was recorded as a receivable.

Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 11.2 million and $ 13.1 million for the three months ended December 28, 2024 and December 30, 2023, respectively.

The Company’s fuel operations use underground tanks for the storage of gasoline and diesel fuel.

1 unchanged sentence

The Company followed the FASB ASC 410 model for determining the asset retirement cost and asset retirement obligation.

The amounts recorded were immaterial for each fuel center, as well as in the aggregate at June 29, 2024 and September 30, 2023.

The amounts recorded were immaterial for each fuel center as well as in the aggregate, at December 28, 2024 and September 28, 2024.

LONG-TERM DEBT

Dollar LIBOR panel ceased following June 30, 2023, and the Company’s debt agreements and interest rate swaps that utilized LIBOR discontinued the use of LIBOR and adopted SOFR, which did not materially impact our condensed consolidated unaudited interim financial statements.

In June 2021, the Company issued at par $ 350.0 million aggregate principal amount of 4.00 % senior notes due 2031 (the “Notes”).

3 unchanged sentences

The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate or SOFR.

The Line allows the Company to issue up to $ 10.0 million of letters of credit, of which none were issued at June 29, 2024.

The Line allows the Company to issue up to $ 10.0 million of letters of credit, of which none were issued at December 28, 2024.

The Company is not required to maintain compensating balances in connection with the Line.

At June 29, 2024, the Company had no borrowings outstanding under the Line.

At December 28, 2024, the Company had no borrowings outstanding under the Line.

In December 2010, the Company completed the funding of $ 99.7 million of bonds (the “ Bonds”) for construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”).

The final maturity date of the Bonds is January 1, 2036 .

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions agreed to hold the Bonds until December 2029, subject to certain events.

redemption of the Bonds by the Company in the annual amount of $ 4.5 million began on January 1, 2014 .

The outstanding balance of the Bonds was $ 49.9 million as of June 29, 2024.

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions would hold the Bonds until December 2029, subject to certain events.

Mandatory redemption of the Bonds by the Company in the annual amount of $ 4.5 million began on January 1, 2014 .

The outstanding balance of the Bonds was $ 49.9 million as of December 28, 2024.

The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029 .

8 unchanged sentences

Both the floating rate debt and the interest rate swap have monthly principal amortization of $ 0.5 million and mature October 1, 2027 .

In December 2019, the Company closed a $ 155 million SOFR-based amortizing floating rate loan secured by real estate, which matures in January 2030 .

In December 2019, the Company entered into a $ 155 million SOFR-based amortizing floating rate loan secured by real estate, which matures in January 2030 .

The Company has an interest rate swap agreement for a current notional amount of $ 115.0 million at a fixed rate of 2.998 %.

4 unchanged sentences

The Company has designated the swaps as cash flow hedges and records the changes in the estimated fair value of the swaps to other comprehensive income each period.

For the three and nine months ended June 29, 2024, the Company recorded $ 0.3 million and $ 3.0 million of other comprehensive loss, respectively, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 13.6 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of June 29, 2024.

For the three and nine months ended June 24, 2023, the Company recorded $ 1.9 million of other comprehensive income and $ 1.3 million of other comprehensive loss, respectively, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 14.8 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of June 24, 2023.

For the three months ended December 28, 2024, the Company recorded $ 2.3 million of other comprehensive income, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 12.0 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of December 28, 2024.

The Company’s long-term debt agreements generally contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company.

Included among the triggering factors permitting the termination or withdrawal of the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its loan documents.

The Company was in compliance with all financial covenants at June 29, 2024.

The Company was in compliance with all financial covenants at December 28, 2024.

The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under all long-term debt agreements in the event of default under any one instrument.

At June 29, 2024, property and equipment with an undepreciated cost of approximately $ 250.4 million were pledged as collateral for long-term debt.

At December 28, 2024, property and equipment with an undepreciated cost of approximately $ 248.8 million were pledged as collateral for long-term debt.

Long-term debt and Line agreements contain various restrictive covenants requiring, among other things, minimum levels of net worth and maintenance of certain financial ratios.

At June 29, 2024, the Company had excess net worth totaling $ 511.0 million calculated under covenants in the Bonds, various floating rate loans, and the Line.

At December 28, 2024, the Company had excess net worth totaling $ 511.2 million calculated under covenants in the Bonds, various floating rate loans (the “Loans”), and the Line.

This amount is available to pay dividends;

4 unchanged sentences

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on January 16, 2025 to stockholders of record on January 9, 2025 .

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on April 18, 2024 to stockholders of record on April 11, 2024 .

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on July 18, 2024 to stockholders of record on July 11, 2024

For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K filed by the Company under the Securities Exchange Act of 1934, on November 29, 2023, as well as Note I, “Earnings Per Common Share” below.

EARNINGS PER COMMON SHARE

2 unchanged sentences

The Class B Common Stock has restrictions on transfer;

however, each share is convertible into one share of Class A Common Stock at any time at the election of the holder .

however, each share is convertible into one share of Class A Common Stock at any time .

Each share of Class A Common Stock has one vote per share and each share of Class B Common Stock has ten votes per share .

5 unchanged sentences

Three Months Ended

Nine Months Ended

June 29, 2024

Allocated net income

Net income allocated, basic

Conversion of Class B to Class A shares

Net income allocated, diluted

Weighted average shares outstanding

Weighted average shares outstanding, basic

Conversion of Class B to Class A shares

Weighted average shares outstanding, diluted

Earnings per share

Three Months Ended

Nine Months Ended

June 24, 2023

December 28, 2024

December 30, 2023

Allocated net income

10 unchanged sentences

The initial terms of the leases are generally 20 years.

The majority of the leases include one or more renewal options and require that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the premises.

The majority of the leases include one or more renewal options and require that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupying the premises.

Several leases contain clauses that require rental payments based on a percentage of gross sales of the supermarket occupying the leased space.

Step rent provisions, escalation clauses and lease incentives are taken into account in computing minimum lease payments.

Operating Leases – Rent expense for all operating leases totaled $ 2.5 million for the three months ended June 29, 2024 and $ 7.6 million for the nine months ended June 29, 2024.

This amount included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which are insignificant.

Step rent provisions, escalation clauses and lease incentives are considered in computing minimum lease payments.

Operating Leases – Rent expense for all operating leases totaled $ 1.7 million for the three months ended December 28, 2024.

This amount included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which were insignificant.

Cash paid for lease liabilities in operating activities approximates operating lease cost.

Finance Leases – Finance lease cost of $ 630.0 thousand included amortization expense of $ 535.5 thousand, which was included in operating and administrative expense, and $ 156.9 thousand of interest expense for the nine months ended June 29, 2024.

Future maturities of lease liabilities as of June 29, 2024 were as follows:

Finance Leases – Finance lease cost of $ 210.0 thousand included amortization expense of $ 178.5 thousand, which was included in operating and administrative expense, and $ 45.1 thousand of interest expense for the three months ended December 28, 2024.

Future maturities of lease liabilities as of December 28, 2024 were as follows:

Operating Leases

4 unchanged sentences

Present value of lease liabilities

On the Condensed Consolidated Balance Sheets, purchases of leased properties offset by lease extensions exercised during the nine months ended June 29, 2024 decreased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities”.

At June 29, 2024, the weighted average remaining lease term for the Company’s operating leases was 13.0 years.

The weighted average discount rate used to determine operating lease liability balances as of June 29, 2024 was 5.275 %, and was 6.0 % for finance lease liability balances.

There were no lease extensions exercised to increase the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” on the Condensed Consolidated Balance Sheets during the three months ended December 28, 2024.

At December 28, 2024, the weighted average remaining lease term for the Company’s operating leases was 15.0 years.

The weighted average discount rate used to determine the operating lease liability balances as of December 28, 2024 was 4.0 %, and was 6.0 % for finance lease liability balances.

Leases as Lessor

At June 29, 2024, the Company owned and operated 97 shopping centers in conjunction with its supermarket operations.

At December 28, 2024, the Company owned and operated 100 shopping centers in conjunction with its supermarket operations.

The Company leases to others a portion of its shopping center properties.

3 unchanged sentences

Three Months Ended

Nine Months Ended

June 29, 2024

December 28, 2024

Rents earned on owned and subleased properties:

2 unchanged sentences

( 2,155,209 )

( 6,054,656 )

Other shopping center expenses

( 1,109,066 )

Future minimum operating lease receipts at June 29, 2024 were as follows:

Future minimum operating lease receipts at December 28, 2024 were as follows:

Remainder of 2025

5 unchanged sentences

Three Months Ended

Nine Months Ended

Revenues from unaffiliated customers:

22 unchanged sentences

The inputs into the determination of fair value require significant management judgment or estimation.

The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified retirement plan assets at June 29, 2024 were as follows (in thousands):

The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified retirement plan assets at December 28, 2024 were as follows (in thousands):

Senior Notes due 2031

1 unchanged sentence

Secured notes payable and other

Interest rate swap derivative contracts asset

Interest rate swaps derivative contract assets

Non-qualified retirement plan assets

9 unchanged sentences

In the opinion of management, the ultimate liability, if any, from all pending legal proceedings and claims is not expected to materially affect the Company’s financial position, the results of its operations, or its cash flows.

The Company is currently working with its insurance carriers to reach final determinations with respect to inventory loss claims related to the impact of Hurricane Helene.

The final amount of the claim is currently being assessed and the timing and exact amount of insurance proceeds remain uncertain.

The Company did not recognize an asset for the insurance recovery receivable in the Consolidated Balance Sheet as of December 28, 2024, because recovery was not yet deemed probable.

The Company will continue to monitor the claims process and will adjust its impact on financials statements accordingly in future periods.

RELATED PARTY TRANSACTIONS

The Company will from time to time make short-term non-interest bearing loans to the Company’s Investment/Profit Sharing Plan to allow the plan to meet distribution obligations during a time when the plan was prohibited from selling shares of the Company’s Class A Common Stock.

During the nine months ended June 29, 2024, there were $ 500,000 loans issued, all of which were repaid.

In January 2024, the Company and a limited liability company having Mr.

Ingle II, the Company’s Chairman of the Board, as one of its principals swapped adjoining properties.

In accordance with the Company’s related party transaction policy, independent fair market value appraisals were obtained, and the transaction was approved by the Audit Committee.

The Company received $ 2.3 million in addition to the swapped property based on these values.

The Company will from time to time make short-term non-interest bearing loans to the Company’s Investment/Profit Sharing Plan to allow the plan to meet distribution obligations during a time when the plan is prohibited from selling shares of the Company’s Class A Common Stock.

During the three months ended December 28, 2024, no such loans were made, repaid or outstanding.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements