What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-03-01 compared with 2022-03-10 · 19 added, 174 removed, 85 unchanged (69% of the section changed)

1 unchanged sentence

The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the S&P Composite-500 Stock Index and the cumulative total return of a Company-selected group index that the Company deems most properly represents its “Peer Group”, for the period of five years.

The Peer group is made up of five retail grocers that the Company feels most closely relate to its size and business profile, and one national grocer the Company believes to be an industry market leader.

The Peer group is made up of five retail grocers that the Company feels most closely relate to its size and business profile, including one national grocer the Company believes to be an industry market leader.

The companies making up the Peer Group, in no particular order, are, Ingles Markets, Inc.;

26 unchanged sentences

Its products sold include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services at locations, 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 and the Company promotes by using Everyday Lower Price, Low Price Guarantee, Low, Low Price, and Loyalty programs.

The store product selection includes national, local and private brands and the Company promotes competitive pricing by using Everyday Lower Price;

Low Price Guarantee;

Low, Low Price;

senior and military discounts;

and Loyalty programs.

The Loyalty program includes reward points that may be redeemed for discounts on items in store, at one of the Company’s fuel stations or one of its third-party fuel station partners.

On January 17, 2019 the Company announced a new pricing strategy for its private brand products named Low, Low Price.

The move took the Company’s private brand products from a high, low pricing strategy to everyday low price.

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 67% of product with the remaining being supplied by direct store vendors.

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 63% of product supplied to stores with the remaining being supplied by direct store vendors and regional wholesalers.

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 corporate offices are located in Sunbury, Pennsylvania where the Company was founded in 1912.

The COVID-19 pandemic resulted in government mandated shutdowns in early 2020, 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 the Company’s sales and gross profits compared to the time periods preceding the impact of the novel coronavirus pandemic.

WEIS MARKETS, INC.

4 unchanged sentences

Weis 2 Go Online allows the customer to order on-line and then pick up their order at a drive-thru location at the store.

The Company began offering home delivery during the third quarter of 2018 and currently offers this convenience to customers in 182 different locations via Shipt® and DoorDash®.

The Company began offering home delivery during the third quarter of 2018 and currently offers this convenience to customers in 195 different locations via Shipt®, DoorDash®, and InstaCart®.

Strategic Imperatives

32 unchanged sentences

The goal of the sustainability strategy is to reduce the Company’s overall carbon footprint by reducing greenhouse gas emissions and reducing the impact on climate change.

The Company’s 2020 sustainability report may be found at:

The Company’s most recently published sustainability report is located at:

https://www.weismarkets.com/sustainability.

6 unchanged sentences

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 table provides the two-year stacked comparable store sales, including and excluding fuel, for the fiscal years ended December 25, 2021, and December 26, 2020, as well as fiscal years ended December 26, 2020, and December 28, 2019, respectively.

Percentage Changes

52 Weeks Ended

The following table provides the two-year stacked comparable store sales, excluding fuel and adjusted for an additional week in 2022 for the fiscal years ended December 31, 2022, and December 25, 2021, as well as fiscal years ended December 25, 2021, and December 26, 2020, respectively.

Percentage Change

Comparable store sales (individual year)

2 unchanged sentences

Comparable store sales, excluding fuel (two-year stacked)

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.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Analysis of Consolidated Statements of Income

Percentage Changes

(amounts in thousands except per share amounts)

For the Fiscal Years Ended December 25, 2021, December 26, 2020 and December 28, 2019

Cost of sales, including advertising, warehousing and distribution expenses

Gross profit on sales

Gross profit margin

Operating, general and administrative expenses

O, G & A, percent of net sales

Income from operations

Operating margin

Investment income (loss) and interest expense

Investment income (loss) and interest expense, percent of net sales

Other income (expense)

Other income (expense), percent of net sales

Income before provision for income taxes

Income before provision for income taxes, percent of net sales

Provision for income taxes

Effective income tax rate

Net income, percent of net sales

Basic and diluted earnings per share

Individual Year-Over-Year Analysis of Sales

Percentage Changes

Net sales, excluding fuel

Comparable store sales

Comparable store sales, excluding fuel

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable when it has been in operation after five full 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.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Net Sales (continued)

According to the latest U.S.

Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index increased 3.5% in 2021, 3.5% in 2020 and 0.9% in 2019.

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 52-week average price of gasoline in the Central Atlantic States increased 31.2%, or $0.76 per gallon, in 2021 compared to the 52-week average in 2020.

The 52-week average price of gasoline in the Central Atlantic States, according to the U.S.

Department of Energy, decreased 12.8%, or $0.36 per gallon, in 2020 compared to the 52-week average in 2019.

Comparable store sales increased for all years presented.

On a comparable store sales basis fresh, pharmacy services and fuel increased in sales.

The Company’s 2021 sales were favorably impacted as a result of increased pharmacy prescription volume, administering COVID-19 vaccines, and higher fuel sales.

Comparable store sales for 2021 compared to 2020 increased 1.7% including fuel and .2% excluding fuel.

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 187 store locations.

“Weis 2 Go Online” allows the customer to order on-line and have their order delivered or pick up their order at an expedient store drive-thru.

The Company has experienced retail inflation and deflation in various commodities for the periods presented.

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.

In addition, impacts of the novel coronavirus pandemic have caused uncertainty about future economic conditions and may change future product mix.

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.

Increased sales volume resulted in an increase in cost of sales.

Both direct product cost and distribution cost increase when sales volume increases.

Gross profit rate was 26.4% in 2021, 26.8% in 2020 and 26.5% in 2019.

The decrease in gross profit rate is attributable to the increased pharmacy and fuel sales, which have a lower gross profit margin than grocery sales, and higher product and supply chain costs.

Pharmacy gross profit margin continues to be pressured by recent changes in industry practices.

The Company cannot predict whether the pharmacy industry practices will change favorably.

The Company experienced an unfavorable non-cash LIFO inventory valuation adjustment, decreasing gross profit by $4.0 million in 2021.

Favorable non-cash LIFO inventory valuation adjustments increased gross profit by $275 thousand and $5.8 million in 2020 and 2019, respectively.

The Company has experienced retail inflation and deflation in various commodities for the periods presented.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Operating, General and Administrative Expenses

The majority of the expenses were driven by increased sales volume.

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 62.2% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor decreased 0.1% in 2021 compared to 2020 and decreased 0.6% in 2020 compared to 2019.

While direct store labor expenses increased in 2021 compared to 2020, the sales increases have outpaced the labor expense increase causing the rate to fall, primarily due to the fixed component of store labor.

Management continues to monitor store labor efficiencies and develop labor standards to reduce costs while maintaining the Company’s customer service expectations.

Currently, the Company is continuing a multi-year initiative to install or upgrade self-checkouts in its stores in response to customer preference and labor supply, including adding convertible dual-use checkout lanes.

The Company’s self-insured health care benefit expenses increased by 0.2% in 2021 compared to 2020 and increased by 9.8% in 2020 compared to 2019.

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $93.8 million, or 2.2% of net sales, for 2021 compared to $90.2 million, or 2.2% of net sales, for 2020 and $85.2 million, or 2.4% of net sales, for 2019.

Depreciation and amortization expense as a percent of sales remained the same in 2021 when compared to 2020 and decreased 0.2% in 2020 when compared to 2019.

See the Liquidity and Capital Resources section for further information regarding the Company’s capital expansion program.

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

is as follows:

(amounts in thousands)

Increase (Decrease)

December 25, 2021

as a % of sales

Employee expense

Utilities expense

Fixed expense (amortization, depreciation, insurance expenses, and occupancy costs)

Outside service and information technology expense

(amounts in thousands)

Increase (Decrease)

December 26, 2020

as a % of sales

Employee expense

Utilities expense

Fixed expense (amortization, depreciation, insurance expenses, and occupancy costs)

The Company continues to realize a reduction in workers compensation self-insurance expense as a result a decrease in claims due to improved associate safety programs and claim resolution efforts.

The Company is experiencing an increase in subscription and other outside expenses as a result of investing in its information technology.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Provision for Income Taxes

The effective income tax rate was 26.6%, 27.3% and 23.3% in 2021, 2020 and 2019, respectively.

The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee expenses.

Not all the Company’s tax credits and state deductions are driven proportionately by taxable income levels, due to these items and the significant increase in taxable income from prior years, the result was a higher effective income tax rate for 2020 and 2021 when compared to 2019.

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 December 25, 2021, the availability under the revolving credit agreement was $25.3 million with $4.7 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 has not had an obligation on the Credit Agreement since the second fiscal quarter of 2018.

The Company’s investment portfolio consists of high-grade bonds with maturity dates between one and 10 years, high grade commercial papers with maturity dates under one year, and three long-held high yield, large capitalized public company equity securities.

The portfolio totaled $205.7 million as of December 25, 2021.

Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

See “Item 7a.

Quantitative and Qualitative Disclosures about Market Risk” for more details regarding the Company’s market risk.

The Company’s capital expansion 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 $150 million in its capital expansion program in 2022.

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

Total cash dividend payments on common stock, on a per share basis, amounted to $1.25 in 2021, $1.24 in 2020 and $1.24 in 2019.

The Company increased its quarterly dividend from 31 cents per share to 32 cents per share in the fourth quarter of 2021.

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.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Cash Flow Information

(amounts in thousands)

For the Fiscal Years Ended December 25, 2021,

December 26, 2020 and December 28, 2019

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities

Cash flows from operating activities decreased in 2021 as compared to 2020 and increased in 2020 as compared to 2019, respectively.

The decrease in 2021 from 2020 is due to settling working capital obligations.

The majority of the increase in 2020 over 2019 is attributed to increased sales volume resulting from the novel coronavirus pandemic and its impact on Net Income.

Property and equipment purchases totaled $151.8 million in 2021, compared to $131.0 million in 2020 and $101.5 million in 2019.

As a percentage of sales, capital expenditures totaled 3.6% in 2021, 3.2% in 2020 and 2.9% in 2019.

The Company significantly increased its marketable securities holdings in 2021 by approximately $96.6 million.

In 2022, the Company plans to maintain or further increase its marketable securities portfolio.

The Company paid dividends of $33.6 million in 2021, $33.4 million in 2020 and $33.4 million in 2019.

The Company increased its quarterly dividend from 31 cents per share to 32 cents per share in the fourth quarter of 2021.

Contractual Obligations

The following table represents scheduled maturities of the Company’s long-term contractual obligations as of December 25, 2021.

Payments due by period

(amounts in thousands)

Operating leases

Off-Balance Sheet Arrangements

The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations or cash flows.

Comparable store sales, adjusted for an additional week in 2022 (individual year)

Comparable store sales, adjusted for an additional week in 2022 (two-year stacked)

Comparable store sales, adjusted for an additional week in 2022, excluding fuel (individual year)

Comparable store sales, adjusted for an additional week in 2022, excluding fuel (two-year stacked)

The 2021 and 2020 years were comprised of 52 weeks, whereas the 2022 year was comprised of 53 weeks.

WEIS MARKETS, INC.

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-K

Item 5. Market for Registrant’s Common Equity