Publix Super Markets (PUSH) 10-Q 2023 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

Commission File Number: 000-00981

 

PUBLIX SUPER MARKETS, INC.

(Exact name of Registrant as specified in its charter)

Florida	59-0324412
(State of incorporation)	(I.R.S. Employer Identification No.)
3300 Publix Corporate Parkway Lakeland, Florida	33811
(Address of principal executive offices)	(Zip Code)

(863) 688-1188

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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 and (2) has been subject to such filing requirements for the past 90 days.

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 during the preceding 12 months.

Yes    X          No         

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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            Accelerated filer           Non-accelerated filer    X    

Smaller reporting company            Emerging growth company           

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    X  

The number of shares of the Registrant’s common stock outstanding as of April 14, 2023 was 3,339,000,000.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts are in millions, except par value)

(Unaudited)

	April 1, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	1,561		1,336
Short-term investments		751			566
Trade receivables		1,078			1,106
Inventories		2,399			2,341
Prepaid expenses		81			74
Total current assets		5,870			5,423
Long-term investments		11,429			10,992
Other noncurrent assets		561			561
Operating lease right-of-use assets		3,044			2,979
Property, plant and equipment		19,122			18,688
Accumulated depreciation		(7,785)			(7,596)
Net property, plant and equipment		11,337			11,092
		$	32,241		31,047
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	2,954		2,812
Accrued expenses:
Contributions to retirement plans		324			687
Self-insurance reserves		217			210
Salaries and wages		283			205
Other		529			637
Current portion of long-term debt		22			36
Current portion of operating lease liabilities		359			359
Income taxes		269			226
Total current liabilities		4,957			5,172
Deferred income taxes		668			575
Self-insurance reserves		272			268
Long-term debt		43			43
Operating lease liabilities		2,606			2,573
Finance lease liabilities		432			423
Other noncurrent liabilities		131			141
Total liabilities		9,109			9,195
Common stock related to Employee Stock Ownership Plan (ESOP)		4,664			4,029
Stockholders’ equity:
Common stock of $1 par value. Authorized 4,000 shares; issued 3,347 shares in 2023 and 3,324 shares in 2022		3,347			3,324
Additional paid-in capital		2,004			1,687
Retained earnings		18,355			17,413
Treasury stock at cost, 7 shares in 2023		(99)			—
Accumulated other comprehensive losses		(511)			(609)
Common stock related to ESOP		(4,664)			(4,029)
Total stockholders’ equity		18,432			17,786
Noncontrolling interests		36			37
Total equity		23,132			21,852
		$	32,241		31,047

See accompanying notes to condensed consolidated financial statements.

1

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts are in millions, except per share amounts)

(Unaudited)

		Three Months Ended
	April 1, 2023			March 26, 2022
Revenues:
Sales		$	14,332		13,241
Other operating income		106			95
Total revenues		14,438			13,336
Costs and expenses:
Cost of merchandise sold		10,528			9,567
Operating and administrative expenses		2,695			2,487
Total costs and expenses		13,223			12,054
Operating profit		1,215			1,282
Investment income (loss)		328			(523)
Other nonoperating income, net		26			26
Earnings before income tax expense		1,569			785
Income tax expense		328			167
Net earnings		$	1,241		618
Weighted average shares outstanding		3,328			3,416
Earnings per share		$	0.37		0.18

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Amounts are in millions)

(Unaudited)

		Three Months Ended
	April 1, 2023			March 26, 2022
Net earnings		$	1,241		618
Other comprehensive earnings:
Unrealized gain (loss) on debt securities net of income taxes of $33.4 and $(127.7) in 2023 and 2022, respectively.		98			(375)
Reclassification adjustment for net realized gain on debt securities net of income taxes of $(0.3) in 2022.		—			(1)
Comprehensive earnings		$	1,339		242

See accompanying notes to condensed consolidated financial statements.

2

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts are in millions)

(Unaudited)

		Three Months Ended
	April 1, 2023			March 26, 2022
Cash flows from operating activities:
Cash received from customers		$	14,422		13,329
Cash paid to employees and suppliers		(12,768)			(11,800)
Income taxes paid		(223)			(6)
Self-insured claims paid		(113)			(112)
Dividends and interest received		94			74
Other operating cash receipts		105			94
Other operating cash payments		(8)			(6)
Net cash provided by operating activities		1,509			1,573
Cash flows from investing activities:
Payment for capital expenditures		(492)			(402)
Proceeds from sale of property, plant and equipment		1			18
Payment for investments		(459)			(1,139)
Proceeds from sale and maturity of investments		193			203
Net cash used in investing activities		(757)			(1,320)
Cash flows from financing activities:
Payment for acquisition of common stock		(317)			(538)
Proceeds from sale of common stock		108			101
Dividends paid		(299)			(253)
Repayment of long-term debt		(19)			(15)
Net cash used in financing activities		(527)			(705)
Net increase (decrease) in cash and cash equivalents		225			(452)
Cash and cash equivalents at beginning of period		1,336			1,132
Cash and cash equivalents at end of period		$	1,561		680

See accompanying notes to condensed consolidated financial statements.     (Continued)

3

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts are in millions)

(Unaudited)

		Three Months Ended
	April 1, 2023			March 26, 2022
Reconciliation of net earnings to net cash provided by operating activities:
Net earnings		$	1,241		618
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		222			202
Increase in last-in, first-out (LIFO) reserve		34			32
Retirement contributions paid or payable in common stock		118			113
Deferred income taxes		60			(154)
Loss (gain) on disposal and impairment of long-lived assets		1			(1)
(Gain) loss on investments		(246)			580
Net amortization of investments		15			21
Changes in operating assets and liabilities providing (requiring) cash:
Trade receivables		28			61
Inventories		(92)			15
Other assets		(5)			(2)
Accounts payable and accrued expenses		86			(222)
Income taxes		43			311
Other liabilities		4			(1)
Total adjustments		268			955
Net cash provided by operating activities		$	1,509		1,573

See accompanying notes to condensed consolidated financial statements.

4

PUBLIX SUPER MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts are in millions, except per share amounts)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Common Stock (Acquired from) Sold to Stock- holders		Accumu- lated Other Compre- hensive Earnings (Losses)		Common Stock Related to ESOP		Total Stock- holders’ Equity
2023
Balances at December 31, 2022		$	3,324		1,687		17,413		—		(609)		(4,029)		17,786
Comprehensive earnings		—			—		1,241		—		98		—		1,339
Dividends, $0.09 per share		—			—		(299)		—		—		—		(299)
Contribution of 31 shares to retirement plan		22			309		—		119		—		—		450
Acquisition of 23 shares from stockholders		—			—		—		(317)		—		—		(317)
Sale of 8 shares to stockholders		1			8		—		99		—		—		108
Change for ESOP related shares		—			—		—		—		—		(635)		(635)
Balances at April 1, 2023		$	3,347		2,004		18,355		(99)		(511)		(4,664)		18,432

2022
Balances at December 25, 2021	$	3,418	1,426	17,156	—	(5)	(3,825)	18,170
Comprehensive earnings	—		—	618	—	(376)	—	242
Dividends, $0.074 per share	—		—	(253)	—	—	—	(253)
Contribution of 31 shares to retirement plan	20		254	—	153	—	—	427
Acquisition of 40 shares from stockholders	—		—	—	(538)	—	—	(538)
Sale of 8 shares to stockholders	—		—	—	101	—	—	101
Change for ESOP related shares	—		—	—	—	—	(600)	(600)
Balances at March 26, 2022	$	3,438	1,680	17,521	(284)	(381)	(4,425)	17,549

See accompanying notes to condensed consolidated financial statements.

5

PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Publix Super Markets, Inc. and subsidiaries (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, the accompanying statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments that are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations. Due to the seasonal nature of the Company’s business, the results of operations for the three months ended April 1, 2023 are not necessarily indicative of the results for the entire 2023 fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (Annual Report).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

On April 1, 2022, the Company filed Articles of Amendment to its Restated Articles of Incorporation in order to effect a 5-for-1 stock split of the Company’s common stock, par value $1.00 per share (Common Stock), and an increase in the number of authorized shares of Common Stock from 1 billion to 4 billion, effective as of the close of business April 14, 2022. The Articles of Amendment were approved by the Company’s Board of Directors on April 1, 2022. All applicable data, including share and per share amounts, in the condensed consolidated financial statements and accompanying notes have been retroactively adjusted to give effect to the stock split.

(2)Fair Value of Financial Instruments

The fair value of certain of the Company’s financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximates their respective carrying amounts due to their short-term maturity.

The fair value of investments is based on market prices using the following measurement categories:

Level 1 – Fair value is determined by using quoted prices in active markets for identical investments. Investments included in this category are equity securities (exchange traded funds).

Level 2 – Fair value is determined by using other than quoted prices. By using observable inputs (for example, benchmark yields, interest rates, reported trades and broker dealer quotes), the fair value is determined through processes such as benchmark curves, benchmarking of similar securities and matrix pricing of corporate, government-sponsored agency, state and municipal bonds by using pricing of similar bonds based on coupons, ratings and maturities. Investments included in this category are primarily debt securities (taxable and tax exempt bonds), including restricted investments in taxable bonds held as collateral.

Level 3 – Fair value is determined by using other than observable inputs. Fair value is determined by using the best information available in the circumstances and requires significant management judgment or estimation. No investments are currently included in this category.

Following is a summary of fair value measurements for investments as of April 1, 2023 and December 31, 2022:

	Fair Value		Level 1	Level 2	Level 3
	(Amounts are in millions)
April 1, 2023	$	12,180	2,331	9,849	—
December 31, 2022	11,558		2,137	9,421	—

6

PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(3)Investments

(a)Debt Securities

Following is a summary of debt securities as of April 1, 2023 and December 31, 2022:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts are in millions)
April 1, 2023
Taxable bonds	$	9,931		10		703	9,238
Tax exempt bonds	30			—		—	30
Restricted investments	187			—		4	183
	$	10,148		10		707	9,451
December 31, 2022
Taxable bonds	$	9,705		6		830	8,881
Tax exempt bonds	37			—		—	37
Restricted investments	170			—		4	166
	$	9,912		6		834	9,084

The Company maintains restricted investments primarily for the benefit of the Company’s insurance carrier related to self-insurance reserves. These investments are held as collateral and not used for claim payments.

Following is a summary of the cost and fair value of debt securities by expected maturity as of April 1, 2023 and December 31, 2022:

	April 1, 2023				December 31, 2022
	Cost		Fair Value		Cost		Fair Value
	(Amounts are in millions)
Due in one year or less	$	758		751		570	566
Due after one year through five years	8,681			8,064		8,355	7,661
Due after five years through ten years	707			634		985	855
Due after ten years	2			2		2	2
	$	10,148		9,451		9,912	9,084

7

PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company had no debt securities with credit losses as of April 1, 2023 and December 31, 2022.

Following is a summary of debt securities with other unrealized losses by the time period impaired as of April 1, 2023 and December 31, 2022:

	Less Than 12 Months				12 Months or Longer			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(Amounts are in millions)
April 1, 2023
Taxable bonds	$	1,303		15	7,223		688	8,526		703
Restricted investments	168			2	15		2	183		4
	$	1,471		17	7,238		690	8,709		707
December 31, 2022
Taxable bonds	$	3,705		199	4,627		631	8,332		830
Restricted investments	151			2	15		2	166		4
	$	3,856		201	4,642		633	8,498		834

There are 448 debt securities contributing to the total unrealized losses of $707 million as of April 1, 2023. Unrealized losses related to debt securities are primarily due to increases in interest rates that occurred since the debt securities were purchased. The Company continues to receive scheduled principal and interest payments on these debt securities.

(b)Equity Securities

Equity securities are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). The fair value of equity securities was $2.7 billion and $2.5 billion as of April 1, 2023 and December 31, 2022, respectively.

(c)Investment Income (Loss)

Net realized gain or loss on investments represents the difference between the cost and the proceeds from the sale of debt and equity securities. The net realized gain or loss on investments excludes the net gain or loss on the sale of equity securities previously recognized through the fair value adjustment, which is presented separately in the following table.

Following is a summary of investment income (loss) for the three months ended April 1, 2023 and March 26, 2022:

		Three Months Ended
	April 1, 2023			March 26, 2022
	(Amounts are in millions)
Interest and dividend income		$	82		57
Net realized gain on investments		—			1
		82			58
Fair value adjustment, due to net unrealized gain (loss), on equity securities held at end of period		246			(581)
		$	328		(523)

8

PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(4)Consolidation of Joint Ventures and Long-Term Debt

From time to time, the Company enters into a joint venture (JV), in the legal form of a limited liability company, with real estate developers to partner in the development of a shopping center with the Company as the anchor tenant. The Company consolidates certain of these JVs in which it has a controlling financial interest. As of April 1, 2023 and December 31, 2022, the carrying amounts of the assets and liabilities of the consolidated JVs were $136 million and $40 million, respectively. The assets are owned by and the liabilities are obligations of the JVs, not the Company, except for a portion of the long-term debt of certain JVs guaranteed by the Company. The JVs are financed with capital contributions from the members, loans and/or the cash flows generated by the JV owned shopping centers once in operation. Total earnings attributable to noncontrolling interests for 2023 and 2022 were immaterial. The Company’s involvement with these JVs does not have a significant effect on the Company’s financial condition, results of operations or cash flows.

The Company’s long-term debt results primarily from the consolidation of loans of certain JVs and loans assumed in connection with the acquisition of certain shopping centers with the Company as the anchor tenant. No loans were assumed during the three months ended April 1, 2023 or March 26, 2022. Maturities of JV loans range from June 2023 through April 2027 and have variable interest rates based on a London Interbank Offered Rate (LIBOR) index plus 200 to 210 basis points. Maturities of assumed shopping center loans range from July 2023 through January 2027 and have fixed interest rates ranging from 4.0% to 7.5%.

(5)Retirement Plan

The Company has a trusteed, noncontributory Employee Stock Ownership Plan (ESOP) for the benefit of eligible employees. Since the Company’s common stock is not traded on an established securities market, the ESOP includes a put option for shares of the Company’s common stock distributed from the ESOP. Shares are distributed from the ESOP primarily to separated vested participants and certain eligible participants who elect to diversify their account balances. Under the Company’s administration of the ESOP’s put option, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value for a specified time period after distribution of the shares from the ESOP. The fair value of distributed shares subject to the put option totaled $914 million and $629 million as of April 1, 2023 and December 31, 2022, respectively. The cost of the shares held by the ESOP totaled $3.8 billion and $3.4 billion as of April 1, 2023 and December 31, 2022, respectively. Due to the Company’s obligation under the put option, the distributed shares subject to the put option and the shares held by the ESOP are classified as temporary equity in the mezzanine section of the condensed consolidated balance sheets and totaled $4.7 billion and $4.0 billion as of April 1, 2023 and December 31, 2022, respectively. The fair value of the shares held by the ESOP totaled $11.3 billion and $10.2 billion as of April 1, 2023 and December 31, 2022, respectively.

9

PUBLIX SUPER MARKETS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(6)Accumulated Other Comprehensive Earnings (Losses)

Following is a reconciliation of the changes in accumulated other comprehensive earnings (losses) net of income taxes for the three months ended April 1, 2023 and March 26, 2022:

	Investments			Postretirement Benefit		Accumulated Other Comprehensive Earnings (Losses)
		(Amounts are in millions)
2023
Balances at December 31, 2022		$	(618)		9		(609)
Unrealized gain on debt securities		98			—		98
Net other comprehensive earnings		98			—		98
Balances at April 1, 2023		$	(520)		9		(511)
2022
Balances at December 25, 2021		$	7		(12)		(5)
Unrealized loss on debt securities		(375)			—		(375)
Net realized gain on debt securities reclassified to investment income		(1)			—		(1)
Net other comprehensive losses		(376)			—		(376)
Balances at March 26, 2022		$	(369)		(12)		(381)

(7)Subsequent Event

On April 3, 2023, the Company declared a quarterly dividend on its common stock of $0.10 per share or $334 million, payable May 1, 2023 to stockholders of record as of the close of business April 14, 2023.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The objective of this section is to provide a summary of material information relevant to enhancing the stockholders’ understanding of the financial condition and results of operations of the Company. Following is an analysis of the financial condition and results of operations of the Company for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022. This information should be read in conjunction with the Company’s condensed consolidated financial statements and accompanying notes and the Annual Report.

Overview

The Company is engaged in the retail food industry and as of April 1, 2023 operated 1,333 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Virginia. The Company plans to expand its retail operations into Kentucky in 2023. The Company has no other significant lines of business or industry segments. For the three months ended April 1, 2023, 12 supermarkets were opened (including two replacement supermarkets) and 18 supermarkets were remodeled. One supermarket was closed during the period. The replacement supermarkets that opened during the three months ended April 1, 2023 replaced two supermarkets closed in a previous period. The supermarket closed in 2023 will be replaced on site in a subsequent period. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.

Results of Operations

Sales

Sales for the three months ended April 1, 2023 were $14.3 billion as compared with $13.2 billion for the three months ended March 26, 2022, an increase of $1.1 billion or 8.2%. The increase in sales for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to new supermarket sales and a 6.4% increase in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets). Comparable store sales for the three months ended April 1, 2023 increased primarily due to the impact of inflation on product costs. Sales for supermarkets that are replaced on site are classified as new supermarket sales since the replacement period for the supermarket is generally 9 to 12 months.

Gross profit

Gross profit (sales less cost of merchandise sold) as a percentage of sales was 26.5% and 27.7% for the three months ended April 1, 2023 and March 26, 2022, respectively. The decrease in gross profit as a percentage of sales for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to the impact of inflation on product costs which was not passed on to customers and increased shrink.

Operating and administrative expenses

Operating and administrative expenses as a percentage of sales were 18.8% for the three months ended April 1, 2023 and March 26, 2022. Operating and administrative expenses as a percentage of sales for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 remained relatively unchanged.

Operating profit

Operating profit as a percentage of sales was 8.5% and 9.7% for the three months ended April 1, 2023 and March 26, 2022, respectively. The decrease in operating profit as a percentage of sales for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to the decrease in gross profit as a percentage of sales.

Investment income (loss)

Investment income for the three months ended April 1, 2023 was $328 million as compared with an investment loss for the three months ended March 26, 2022 of $523 million. Excluding the impact of net unrealized gains on equity securities in 2023 and net unrealized losses on equity securities in 2022, investment income would have been $82 million and $58 million for the three months ended April 1, 2023 and March 26, 2022, respectively. Excluding the impact of net unrealized gains on equity securities in 2023 and net unrealized losses on equity securities in 2022, the increase in investment income for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to an increase in interest and dividend income.

Income tax expense

The effective income tax rate was 20.9% and 21.3% for the three months ended April 1, 2023 and March 26, 2022, respectively. The decrease in the effective income tax rate for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to the increased impact of permanent deductions and credits relative to earnings before income tax expense.

11

Net earnings

Net earnings were $1.2 billion or $0.37 per share and $618 million or $0.18 per share for the three months ended April 1, 2023 and March 26, 2022, respectively. Net earnings as a percentage of sales were 8.7% and 4.7% for the three months ended April 1, 2023 and March 26, 2022, respectively. Excluding the impact of net unrealized gains on equity securities in 2023 and net unrealized losses on equity securities in 2022, net earnings would have been $1.1 billion or $0.32 per share and 7.4% as a percentage of sales for the three months ended April 1, 2023 and $1.1 billion or $0.31 per share and 7.9% as a percentage of sales for the three months ended March 26, 2022. Excluding the impact of net unrealized gains on equity securities in 2023 and net unrealized losses on equity securities in 2022, the decrease in net earnings as a percentage of sales for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to the decrease in operating profit as a percentage of sales.

Non-GAAP Financial Measures

In addition to reporting financial results for the three months ended April 1, 2023 and March 26, 2022 in accordance with GAAP, the Company presents net earnings and earnings per share excluding the impact of equity securities being measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). These measures are not in accordance with, or an alternative to, GAAP. The Company excludes the impact of the fair value adjustment since it is primarily due to temporary equity market fluctuations that do not reflect the Company’s operations. The Company believes this information is useful in providing period-to-period comparisons of the results of operations. Following is a reconciliation of net earnings to net earnings excluding the impact of the fair value adjustment for the three months ended April 1, 2023 and March 26, 2022:

		Three Months Ended
	April 1, 2023			March 26, 2022
	(Amounts are in millions, except per share amounts)
Net earnings		$	1,241		618
Fair value adjustment, due to net unrealized (gain) loss, on equity securities held at end of period		(246)			581
Income tax expense (benefit) (1)		62			(148)
Net earnings excluding impact of fair value adjustment		$	1,057		1,051
Weighted average shares outstanding		3,328			3,416
Earnings per share excluding impact of fair value adjustment		$	0.32		0.31

(1)Income tax expense (benefit) is based on the Company’s combined federal and state statutory income tax rates.

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Liquidity and Capital Resources

Cash and cash equivalents, short-term investments and long-term investments totaled $13.7 billion as of April 1, 2023, as compared with $12.9 billion as of December 31, 2022 and $14.1 billion as of March 26, 2022. The decrease from the first quarter of 2022 to the first quarter of 2023 was primarily due to the decrease in the fair value of investments.

Net cash provided by operating activities

Net cash provided by operating activities was $1.5 billion and $1.6 billion for the three months ended April 1, 2023 and March 26, 2022, respectively. The decrease in net cash provided by operating activities for the three months ended April 1, 2023 as compared with the three months ended March 26, 2022 was primarily due to 2022 income tax payments deferred to 2023 due to Hurricane Ian, partially offset by the timing of payments for merchandise.

Net cash used in investing activities

Net cash used in investing activities was $757 million and $1.3 billion for the three months ended April 1, 2023 and March 26, 2022, respectively. The primary use of net cash in investing activities for the three months ended April 1, 2023 was funding capital expenditures and net increases in investments. Capital expenditures for the three months ended April 1, 2023 totaled $492 million. These expenditures were incurred in connection with the opening of 12 supermarkets (including two replacement supermarkets) and the remodeling of 18 supermarkets. Expenditures were also incurred for new supermarkets and remodels in progress, construction or expansion of warehouses, new or enhanced information technology hardware and software and the acquisition or development of shopping centers in which the Company operates. For the three months ended April 1, 2023, the payment for investments, net of the proceeds from the sale and maturity of investments, was $266 million.

Net cash used in financing activities

Net cash used in financing activities was $527 million and $705 million for the three months ended April 1, 2023 and March 26, 2022, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $209 million and $437 million for the three months ended April 1, 2023 and March 26, 2022, respectively. The Company currently repurchases common stock at the stockholders’ request in accordance with the terms of the Company’s Employee Stock Purchase Plan (ESPP), Non-Employee Directors Stock Purchase Plan (Directors Plan), 401(k) Plan and ESOP. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then current value. However, with the exception of certain shares distributed from the ESOP, such purchases are not required and the Company retains the right to discontinue them at any time.

Dividends

The Company paid quarterly dividends on its common stock totaling $299 million or $0.09 per share and $253 million or $0.074 per share during the three months ended April 1, 2023 and March 26, 2022, respectively.

Capital expenditures projection

Capital expenditures for the remainder of 2023 are expected to be approximately $1.8 billion, primarily related to new supermarkets, remodeling existing supermarkets, construction or expansion of warehouses, new or enhanced information technology hardware and software and the acquisition or development of shopping centers in which the Company operates. The shopping center acquisitions are financed with internally generated funds and assumed debt, if prepayment penalties for the debt are determined to be significant. This capital program is subject to continuing change and review.

Cash requirements

In 2023, cash requirements for operations, capital expenditures, common stock repurchases and dividend payments are expected to be financed by internally generated funds or liquid assets. Based on the Company’s financial position, it is expected that short-term and long-term borrowings would be available to support the Company’s liquidity requirements, if needed.

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Forward-Looking Statements

Certain information provided by the Company in this Quarterly Report on Form 10-Q (Quarterly Report) may be forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Forward-looking information includes statements about the future performance of the Company and is based on management’s assumptions and beliefs in light of the information currently available to them. When used, the words “plan,” “estimate,” “project,” “intend,” “expect,” “believe,” “will” and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to, competitive practices and pricing in the food and drug industries generally and particularly in the Company’s principal markets; results of programs to increase sales, including private label sales; results of programs to control or reduce costs; changes in buying, pricing and promotional practices; changes in shrink management; supply chain disruptions; changes in the general economy, including an economic downturn associated with inflation, the coronavirus pandemic, international conflicts, acts of terrorism or other disruptions; changes in consumer spending; changes in population, employment and job growth in the Company’s principal markets; impacts of a public health crisis, geopolitical conditions or other significant catastrophic events; impacts of an intrusion into, compromise of or disruption in the Company’s information technology systems; and other factors affecting the Company’s business within or beyond the Company’s control. These factors include changes in the rate of inflation; changes in federal, state and local laws and regulations; adverse determinations with respect to litigation or other claims; ability to recruit and retain employees; ability to construct new supermarkets or complete remodels as rapidly as planned; increases in product costs; and increases in operating costs including, but not limited to, labor, fuel and energy costs, debit and credit card fees and pharmacy fees. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward-looking statements. Except as may be required by applicable law, the Company assumes no obligation to publicly update these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments. There have been no material changes in the market risk factors from those disclosed in the Annual Report.

Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer each concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended April 1, 2023 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As reported in the Annual Report, the Company is subject from time to time to various lawsuits, claims and charges arising in the normal course of business. The Company believes its recorded reserves are adequate in light of the probable and estimable liabilities. The estimated amount of reasonably possible losses for lawsuits, claims and charges, individually and in the aggregate, is considered to be immaterial. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors from those disclosed in the Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Following are the shares of common stock repurchased by the Company during the three months ended April 1, 2023 (amounts are in millions, except per share amounts):

 

Period		Total Number of Shares Purchased		Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
January 1, 2023 through February 4, 2023			5		$	13.19	N/A	N/A
February 5, 2023 through March 4, 2023			10		14.02		N/A	N/A
March 5, 2023 through April 1, 2023			8		14.55		N/A	N/A
	Total		23		$	13.99	N/A	N/A

(1)Common stock is made available for sale by the Company only to its current employees and members of its Board of Directors through the ESPP and Directors Plan and to participants of the 401(k) Plan. In addition, common stock is provided to employees through the ESOP. The Company currently repurchases common stock subject to certain terms and conditions. The ESPP, Directors Plan, 401(k) Plan and ESOP each contain provisions prohibiting any transfer for value without the owner first offering the common stock to the Company.

The Company’s common stock is not traded on an established securities market. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company does not believe that these repurchases of its common stock are within the scope of a publicly announced plan or program (although the terms of the plans discussed above have been communicated to the participants). Thus, the Company does not believe that it has made any repurchases during the three months ended April 1, 2023 required to be disclosed in the last two columns of the table.

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

Not Applicable

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Item 6. Exhibits

31.1    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101    The following financial information from this Quarterly Report is formatted in Extensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Earnings, (iii) Condensed Consolidated Statements of Comprehensive Earnings, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity and (vi) Notes to Condensed Consolidated Financial Statements.

104     Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

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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.

		PUBLIX SUPER MARKETS, INC.
Date:	May 1, 2023	/s/  Merriann M. Metz
		Merriann M. Metz, Secretary
Date:	May 1, 2023	/s/  David P. Phillips
		David P. Phillips, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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