What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 34 added, 33 removed, 190 unchanged (26% of the section changed)

9 unchanged sentences

For the Fiscal Years Ended December 28, 2024, December 30, 2023 and December 31, 2022

Other revenue

Total revenue

Cost of sales, including advertising, warehousing and distribution expenses

Gross profit on sales

Gross profit margin

30 unchanged sentences

According to the latest U.S.

Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index increased 5.0% in 2023, 11.4% in 2022, 3.5% in 2021.

Bureau of Labor Statistics’ report, the annual Food-at-Home Price Index increased 1.8% in 2024, adjusted, 5.0% in 2023 and 11.4% in 2022.

Even though the U.S.

3 unchanged sentences

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

Department of Energy, increased 31.4%, or $1.00 per gallon, in 2022 compared to the 52-week average in 2021.

Department of Energy, decreased 10.1%, or $0.42 per gallon, in 2023 compared to the 53-week average in 2022.

Comparable store sales, excluding fuel and adjusted for the 53rd week in 2022, increased for all years presented.

Comparable store sales, including fuel, decreased year over year.

On a comparable store sales basis pharmacy services increased in sales.

Comparable store sales, adjusted for an additional week in 2022 increased 2.3% excluding fuel and 1.7% including fuel for 2023 compared to 2022.

Comparable store sales, including fuel, increased in 2024 compared to 2023, which decreased when compared to 2022.

On a comparable store sales basis pharmacy services increased in sales driven by the increased number of filled prescriptions.

Comparable store sales increased 1.9% excluding fuel and 1.7% including fuel for 2024 compared to 2023.

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 190 store locations.

1 unchanged sentence

The Company also currently offers home delivery to customers in all 198 of its locations via multiple grocery delivery partners.

During 2023, the Company’s net sales were negatively impacted by declining government benefits.

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.

5 unchanged sentences

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

Gross profit rate was 24.7% in 2023, 25.2% in 2022, 26.4% in 2021.

The decrease in gross profit rate is attributable to increased pharmacy and fuel sales, which have a lower gross profit margin than grocery sales;

and higher product and supply chain costs.

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $6.7 million, $29.2 million and $4.0 million in 2023, 2022 and 2021, respectively.

Gross profit rate was 25.2% in 2024, 25.1% in 2023, and 25.6% in 2022.

The increase in gross profit rate is attributable to increased grocery sales, which have a higher gross profit margin than pharmacy and fuel sales.

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $608 thousand, $6.7 million and $29.2 million in 2024, 2023 and 2022, respectively.

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

5 unchanged sentences

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 59.9% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor increased 0.1% in 2023 compared to 2022 and decreased 0.5% in 2022 compared to 2021.

Direct store labor expenses increased slightly in 2023 compared to 2022 due to flat net sales results for the same period.

Direct store labor increased in 2022 compared to 2021, as sales increases outpaced the labor expense increase causing the rate to fall, primarily due to the fixed component of store labor.

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 55.7% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor increased by 0.2% in 2024 compared to 2023 and increased 0.1% in 2023 compared to 2022.

Direct store labor expenses increased in 2024 compared to 2023 due to increased wage expenses for hourly employees.

Direct store labor increased slightly in 2023 compared to 2022 due to flat net sales results for the same period.

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

During 2023, the Company completed 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 decreased by 18.0% and 8.5% in 2023 and 2022, respectively.

As a percent of sales, the Company’s self-insured health care benefit expenses decreased by 0.1% and 0.2%, in 2023 and 2022, respectively.

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $102.8 million, or 2.2% of net sales, for 2024 compared to $98.0 million, or 2.2% of net sales, for 2023 compared to $94.6 million, or 2.0% of net sales, for 2022.

5 unchanged sentences

as a % of sales

Associate insurance benefits expense

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

Repairs and maintenance expense

Other expenses (Employee expense, utilities, technology, asset disposals and insurance proceeds)

Employee expense

Employee insurance benefits expense

Third party fees (information technology, consulting, and financial service fees)

Supplies expense

Other expenses (utilities, asset disposals, and deferred compensation plan liability)

The net increase in other expenses to 2024 from 2023 included a gain from the asset disposal on the sale of business assets and the change in the Company’s deferred compensation plan liability.

Employee insurance benefit expense increased in 2024 from 2023 due to more high dollar claims.

(amounts in thousands)

2 unchanged sentences

as a % of sales

Employee expense

Utilities expense

Employee insurance benefits expense

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

Other expenses (financial service fees, technology, repairs and maintenance, supplies)

The majority of the increases in other expenses from 2022 to 2023 were technology expenses due to more third-party information technology subscription and consulting services and less asset disposals and insurance proceeds.

The majority of the increases in other expenses from 2021 to 2022 were higher financial service fees due to more sales transaction dollars paid with debit and credit cards and more third-party information technology subscription and consulting services.

Repairs and maintenance expense

Other expenses (employee expense, utilities, technology, asset disposals and insurance proceeds)

The majority of the decrease in other expenses to 2023 from 2022 were technology expenses due to more third-party information technology subscription and consulting services offset by less asset disposals and insurance proceeds.

Employee insurance benefits expense decreased to 2023 from 2022 due to a dependent audit which resulted in fewer claims.

WEIS MARKETS, INC.

5 unchanged sentences

The Company reduced its provision for income taxes by $5.5 million in 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.

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, offset by taxable income changes, inclusive of, updating market sourcing rules, and codifying the economic nexus standard.

Liquidity and Capital Resources

12 unchanged sentences

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 continues to reinvest in its long-term capital expenditure program including plans to complete multiple carryover projects from 2022 and 2023 that were delayed due to labor and supply chain disruptions.

The Company completed the purchase of a store located in Newville, Pennsylvania in the first quarter of 2025.

Management continues to reinvest in its long-term capital expenditure program including plans to complete multiple carryover projects from prior years that were delayed due to labor and supply chain disruptions.

The Company anticipates to fund the long-term capital expenditure program, the acquisition of retail stores, the construction of additional distribution facilities, repurchases of common stock, and cash dividends on common stock through its cash and cash equivalents, marketable securities, cash flows from operating activities, and revolving credit agreement.

17 unchanged sentences

Financing activities

Cash flows from operating activities decreased in 2023 as compared to 2022 and 2021, respectively.

The decrease in 2023 from 2022 is due to lower net income and in 2022 from 2021 is due to increases in inventory.

Cash flows from operating activities decreased in 2024 as compared to 2023 and 2022.

The decrease in 2024 from 2023 is due to increased value of inventory on hand due to timing of New Year’s selling period and in 2023 from 2022 is due to lower net income.

Property and equipment purchases totaled $168.5 million in 2024, $104.0 million in 2023 and $122.2 million in 2022.

As a percentage of sales, capital expenditures totaled 3.5% in 2024, 2.2% in 2023 and 2.5% in 2022.

Multiple projects from 2022 and 2023 are expected to be completed in 2024 due to labor and supply chain disruptions.

The Company significantly increased its marketable securities holdings in 2023 by approximately $39.5 million and in 2022 the Company maintained its marketable securities portfolio.

The Company decreased its marketable securities holdings in 2024 by $34.0 million to fund the increase in capital expenditures and increased its marketable securities holdings in 2023 by approximately $39.5 million and in 2022 the Company maintained its marketable securities portfolio.

In 2024, the Company purchased two previously leased store locations.

The Company also completed a business acquisition in 2024, for which cash consideration totaled $16.2 million.

The Company paid dividends of $36.6 million in 2024, $36.6 million in 2023 and $35.0 million in 2022.

The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022.

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

Contractual Obligations

45 unchanged sentences

Self-Insurance

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims.

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and employee medical benefit claims.

The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported.

18 unchanged sentences

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 7. Management’s Discussion and Analysis