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 March 30, 2024
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 15, 2024 was 3,306,000,000.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PUBLIX SUPER MARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts are in millions, except par value)
(Unaudited)
| March 30, 2024 | December 30, 2023 | |||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 756 | 865 | |||||||||||||||||||||||||||||
| Short-term investments | 2,322 | 1,899 | ||||||||||||||||||||||||||||||
| Trade receivables | 1,293 | 1,174 | ||||||||||||||||||||||||||||||
| Inventories | 2,431 | 2,462 | ||||||||||||||||||||||||||||||
| Prepaid expenses | 85 | 82 | ||||||||||||||||||||||||||||||
| Total current assets | 6,887 | 6,482 | ||||||||||||||||||||||||||||||
| Long-term investments | 12,445 | 11,867 | ||||||||||||||||||||||||||||||
| Other noncurrent assets | 760 | 730 | ||||||||||||||||||||||||||||||
| Operating lease right-of-use assets | 3,128 | 3,121 | ||||||||||||||||||||||||||||||
| Property, plant and equipment | 20,943 | 20,393 | ||||||||||||||||||||||||||||||
| Accumulated depreciation | (8,399) | (8,209) | ||||||||||||||||||||||||||||||
| Net property, plant and equipment | 12,544 | 12,184 | ||||||||||||||||||||||||||||||
| $ | 35,764 | 34,384 | ||||||||||||||||||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||||||||
| Accounts payable | $ | 3,077 | 2,931 | |||||||||||||||||||||||||||||
| Accrued expenses: | ||||||||||||||||||||||||||||||||
| Contributions to retirement plans | 338 | 730 | ||||||||||||||||||||||||||||||
| Self-insurance reserves | 271 | 263 | ||||||||||||||||||||||||||||||
| Salaries and wages | 339 | 226 | ||||||||||||||||||||||||||||||
| Other | 624 | 537 | ||||||||||||||||||||||||||||||
| Current portion of long-term debt | 17 | 17 | ||||||||||||||||||||||||||||||
| Current portion of operating lease liabilities | 358 | 361 | ||||||||||||||||||||||||||||||
| Income taxes | 252 | 217 | ||||||||||||||||||||||||||||||
| Total current liabilities | 5,276 | 5,282 | ||||||||||||||||||||||||||||||
| Deferred income taxes | 849 | 764 | ||||||||||||||||||||||||||||||
| Self-insurance reserves | 269 | 263 | ||||||||||||||||||||||||||||||
| Long-term debt | 41 | 42 | ||||||||||||||||||||||||||||||
| Operating lease liabilities | 2,608 | 2,624 | ||||||||||||||||||||||||||||||
| Finance lease liabilities | 609 | 536 | ||||||||||||||||||||||||||||||
| Other noncurrent liabilities | 212 | 202 | ||||||||||||||||||||||||||||||
| Total liabilities | 9,864 | 9,713 | ||||||||||||||||||||||||||||||
| Common stock related to Employee Stock Ownership Plan (ESOP) | 4,835 | 4,220 | ||||||||||||||||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||||||||||||||||
Common stock of $1 par value. Authorized 4,000 shares; issued 3,316 shares in 2024 and 3,294 shares in 2023 | 3,316 | 3,294 | ||||||||||||||||||||||||||||||
| Additional paid-in capital | 2,323 | 2,005 | ||||||||||||||||||||||||||||||
| Retained earnings | 20,778 | 19,741 | ||||||||||||||||||||||||||||||
| Treasury stock at cost, 9 shares in 2024 | (133) | — | ||||||||||||||||||||||||||||||
| Accumulated other comprehensive losses | (419) | (404) | ||||||||||||||||||||||||||||||
| Common stock related to ESOP | (4,835) | (4,220) | ||||||||||||||||||||||||||||||
| Total stockholders’ equity | 21,030 | 20,416 | ||||||||||||||||||||||||||||||
| Noncontrolling interests | 35 | 35 | ||||||||||||||||||||||||||||||
| Total equity | 25,900 | 24,671 | ||||||||||||||||||||||||||||||
| $ | 35,764 | 34,384 | ||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Sales | $ | 15,054 | 14,332 | |||||||||||||||||||||||||||||
| Other operating income | 108 | 106 | ||||||||||||||||||||||||||||||
| Total revenues | 15,162 | 14,438 | ||||||||||||||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of merchandise sold | 11,159 | 10,528 | ||||||||||||||||||||||||||||||
| Operating and administrative expenses | 2,808 | 2,695 | ||||||||||||||||||||||||||||||
| Total costs and expenses | 13,967 | 13,223 | ||||||||||||||||||||||||||||||
| Operating profit | 1,195 | 1,215 | ||||||||||||||||||||||||||||||
| Investment income | 495 | 328 | ||||||||||||||||||||||||||||||
| Other nonoperating income, net | 32 | 26 | ||||||||||||||||||||||||||||||
| Earnings before income tax expense | 1,722 | 1,569 | ||||||||||||||||||||||||||||||
| Income tax expense | 356 | 328 | ||||||||||||||||||||||||||||||
| Net earnings | $ | 1,366 | 1,241 | |||||||||||||||||||||||||||||
| Weighted average shares outstanding | 3,297 | 3,328 | ||||||||||||||||||||||||||||||
| Earnings per share | $ | 0.41 | 0.37 | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts are in millions)
(Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||
| Net earnings | $ | 1,366 | 1,241 | |||||||||||||||||||||||||||||
| Other comprehensive (losses) earnings: | ||||||||||||||||||||||||||||||||
| Unrealized (loss) gain on debt securities net of income taxes of $(4.8) and $33.4 in 2024 and 2023, respectively. | (15) | 98 | ||||||||||||||||||||||||||||||
| Comprehensive earnings | $ | 1,351 | 1,339 | |||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||||||||
| Cash received from customers | $ | 15,048 | 14,422 | |||||||||||||||||||||||||||||
| Cash paid to employees and suppliers | (13,244) | (12,768) | ||||||||||||||||||||||||||||||
| Income taxes paid | (205) | (223) | ||||||||||||||||||||||||||||||
| Self-insured claims paid | (131) | (113) | ||||||||||||||||||||||||||||||
| Dividends and interest received | 110 | 94 | ||||||||||||||||||||||||||||||
| Other operating cash receipts | 106 | 105 | ||||||||||||||||||||||||||||||
| Other operating cash payments | (9) | (8) | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities | 1,675 | 1,509 | ||||||||||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||||||||
| Payment for capital expenditures | (576) | (492) | ||||||||||||||||||||||||||||||
| Proceeds from sale of property, plant and equipment | 9 | 1 | ||||||||||||||||||||||||||||||
| Payment for investments | (1,050) | (459) | ||||||||||||||||||||||||||||||
| Proceeds from sale and maturity of investments | 452 | 193 | ||||||||||||||||||||||||||||||
| Net cash used in investing activities | (1,165) | (757) | ||||||||||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||||||||
| Payment for acquisition of common stock | (394) | (317) | ||||||||||||||||||||||||||||||
| Proceeds from sale of common stock | 110 | 108 | ||||||||||||||||||||||||||||||
| Dividends paid | (329) | (299) | ||||||||||||||||||||||||||||||
| Repayment of long-term debt | (6) | (19) | ||||||||||||||||||||||||||||||
| Net cash used in financing activities | (619) | (527) | ||||||||||||||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (109) | 225 | ||||||||||||||||||||||||||||||
| Cash and cash equivalents at beginning of period | 865 | 1,336 | ||||||||||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 756 | 1,561 | |||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||
Reconciliation of net earnings to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 1,366 | 1,241 | |||||||||||||||||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 243 | 222 | ||||||||||||||||||||||||||||||
| Increase in last-in, first-out (LIFO) reserve | 9 | 34 | ||||||||||||||||||||||||||||||
| Retirement contributions paid or payable in common stock | 130 | 118 | ||||||||||||||||||||||||||||||
| Deferred income taxes | 90 | 60 | ||||||||||||||||||||||||||||||
| (Gain) loss on disposal and impairment of long-lived assets | (6) | 1 | ||||||||||||||||||||||||||||||
| Gain on investments | (387) | (246) | ||||||||||||||||||||||||||||||
| Net amortization of investments | 6 | 15 | ||||||||||||||||||||||||||||||
Changes in operating assets and liabilities providing (requiring) cash: | ||||||||||||||||||||||||||||||||
| Trade receivables | (119) | 28 | ||||||||||||||||||||||||||||||
| Inventories | 22 | (92) | ||||||||||||||||||||||||||||||
| Other assets | 21 | (5) | ||||||||||||||||||||||||||||||
| Accounts payable and accrued expenses | 257 | 86 | ||||||||||||||||||||||||||||||
| Income taxes | 35 | 43 | ||||||||||||||||||||||||||||||
| Other liabilities | 8 | 4 | ||||||||||||||||||||||||||||||
| Total adjustments | 309 | 268 | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 1,675 | 1,509 | |||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 30, 2023 | $ | 3,294 | 2,005 | 19,741 | — | (404) | (4,220) | 20,416 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive earnings | — | — | 1,366 | — | (15) | — | 1,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends, $0.10 per share | — | — | (329) | — | — | — | (329) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contribution of 32 shares to retirement plan | 22 | 312 | — | 157 | — | — | 491 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of 26 shares from stockholders | — | — | — | (394) | — | — | (394) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of 7 shares to stockholders | — | 6 | — | 104 | — | — | 110 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change for ESOP related shares | — | — | — | — | — | (615) | (615) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 30, 2024 | $ | 3,316 | 2,323 | 20,778 | (133) | (419) | (4,835) | 21,030 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 30, 2024 may not necessarily be indicative of the results for the entire 2024 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 30, 2023 (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.
(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 (primarily 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 and government-sponsored agency bonds by using pricing of similar bonds based on coupons, ratings and maturities. Investments included in this category are debt securities (primarily taxable 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 March 30, 2024 and December 30, 2023:
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
| (Amounts are in millions) | ||||||||||||||||||||||||||
| March 30, 2024 | $ | 14,767 | 3,062 | 11,705 | — | |||||||||||||||||||||
| December 30, 2023 | 13,766 | 2,665 | 11,101 | — | ||||||||||||||||||||||
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 March 30, 2024 and December 30, 2023:
| Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||||||||||||
| (Amounts are in millions) | ||||||||||||||||||||||||||||||||||||||
| March 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Taxable bonds | $ | 12,093 | 14 | 584 | 11,523 | |||||||||||||||||||||||||||||||||
| Restricted investments | 184 | — | 2 | 182 | ||||||||||||||||||||||||||||||||||
| $ | 12,277 | 14 | 586 | 11,705 | ||||||||||||||||||||||||||||||||||
| December 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| Taxable bonds | $ | 11,467 | 23 | 574 | 10,916 | |||||||||||||||||||||||||||||||||
| Restricted investments | 186 | 2 | 3 | 185 | ||||||||||||||||||||||||||||||||||
| $ | 11,653 | 25 | 577 | 11,101 | ||||||||||||||||||||||||||||||||||
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 March 30, 2024 and December 30, 2023:
| March 30, 2024 | December 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Cost | Fair Value | Cost | Fair Value | |||||||||||||||||||||||||||||||||||
| (Amounts are in millions) | ||||||||||||||||||||||||||||||||||||||
| Due in one year or less | $ | 2,341 | 2,322 | 1,906 | 1,899 | |||||||||||||||||||||||||||||||||
| Due after one year through five years | 9,241 | 8,688 | 9,404 | 8,853 | ||||||||||||||||||||||||||||||||||
| Due after five years through ten years | 694 | 694 | 327 | 333 | ||||||||||||||||||||||||||||||||||
| Due after ten years | 1 | 1 | 16 | 16 | ||||||||||||||||||||||||||||||||||
| $ | 12,277 | 11,705 | 11,653 | 11,101 | ||||||||||||||||||||||||||||||||||
7
PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company had no debt securities with credit losses as of March 30, 2024 and December 30, 2023.
Following is a summary of debt securities with other unrealized losses by the time period impaired as of March 30, 2024 and December 30, 2023:
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) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable bonds | $ | 1,635 | 7 | 7,876 | 577 | 9,511 | 584 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted investments | 59 | — | 62 | 2 | 121 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 1,694 | 7 | 7,938 | 579 | 9,632 | 586 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| December 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable bonds | $ | 1,276 | 2 | 7,845 | 572 | 9,121 | 574 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted investments | 30 | 1 | 76 | 2 | 106 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 1,306 | 3 | 7,921 | 574 | 9,227 | 577 | ||||||||||||||||||||||||||||||||||||||||||||||||||
There were 466 debt securities contributing to the total unrealized losses of $586 million as of March 30, 2024. 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 $3.1 billion and $2.7 billion as of March 30, 2024 and December 30, 2023, 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. The Company had no net realized gain or loss on investments during the three months ended March 30, 2024 and April 1, 2023.
Following is a summary of investment income for the three months ended March 30, 2024 and April 1, 2023:
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Amounts are in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest and dividend income | $ | 108 | 82 | |||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment, due to net unrealized gain, on equity securities held at end of period | 387 | 246 | ||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 495 | 328 | ||||||||||||||||||||||||||||||||||||||||||||||||
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PUBLIX SUPER MARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(4)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 $827 million and $604 million as of March 30, 2024 and December 30, 2023, respectively. The cost of the shares held by the ESOP totaled $4.0 billion and $3.6 billion as of March 30, 2024 and December 30, 2023, 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 $4.8 billion and $4.2 billion as of March 30, 2024 and December 30, 2023, respectively. The fair value of the shares held by the ESOP totaled $11.4 billion and $11.2 billion as of March 30, 2024 and December 30, 2023, respectively.
(5)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 March 30, 2024 and April 1, 2023:
| Investments | Postretirement Benefit | Accumulated Other Comprehensive Earnings (Losses) | |||||||||||||||||||||||||||||||||||||||
| (Amounts are in millions) | |||||||||||||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||
| Balances at December 30, 2023 | $ | (412) | 8 | (404) | |||||||||||||||||||||||||||||||||||||
| Unrealized loss on debt securities | (15) | — | (15) | ||||||||||||||||||||||||||||||||||||||
| Net other comprehensive losses | (15) | — | (15) | ||||||||||||||||||||||||||||||||||||||
| Balances at March 30, 2024 | $ | (427) | 8 | (419) | |||||||||||||||||||||||||||||||||||||
| 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) | |||||||||||||||||||||||||||||||||||||
(6)Subsequent Event
On April 1, 2024, the Company declared a quarterly dividend on its common stock of $0.1075 per share or $355 million, payable May 1, 2024 to stockholders of record as of the close of business April 15, 2024.
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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 March 30, 2024 as compared with the three months ended April 1, 2023. 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 March 30, 2024 operated 1,371 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina, Virginia and Kentucky. The Company has no other significant lines of business or industry segments. For the three months ended March 30, 2024, 13 supermarkets were opened (including three replacement supermarkets) and 30 supermarkets were remodeled. Two supermarkets were closed during the period. The replacement supermarkets that opened during the three months ended March 30, 2024 replaced one supermarket closed in the same period and two supermarkets closed in a previous period. The remaining supermarket closed in 2024 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 March 30, 2024 were $15.1 billion as compared with $14.3 billion for the three months ended April 1, 2023, an increase of $722 million or 5.0%. The increase in sales for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to new supermarket sales and a 2.8% increase in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets). The Company estimates that its sales for the three months ended March 30, 2024 increased $150 million or 1.0% due to the effect of the Easter holiday being in the first quarter in 2024. In 2023, the effect of the Easter holiday was in the second quarter. Comparable store sales for the three months ended March 30, 2024 increased primarily due to the impact of inflation on product costs and the effect of the early Easter holiday. Sales for supermarkets that are replaced on site are classified as new supermarket sales since the replacement period for the supermarket is generally 12 to 15 months.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 25.9% and 26.5% for the three months ended March 30, 2024 and April 1, 2023, respectively. The decrease in gross profit as a percentage of sales for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to a Medicare reimbursement process change related to pharmacy fees effective January 1, 2024, partially offset by the decrease in distribution costs. The Medicare reimbursement process change reduces both gross profit and operating and administrative expenses.
Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 18.7% and 18.8% for the three months ended March 30, 2024 and April 1, 2023, respectively. The decrease in operating and administrative expenses as a percentage of sales for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to a Medicare reimbursement process change related to pharmacy fees effective January 1, 2024, partially offset by the increase in payroll costs as a percentage of sales. The Medicare reimbursement process change reduces both gross profit and operating and administrative expenses.
Operating profit
Operating profit as a percentage of sales was 7.9% and 8.5% for the three months ended March 30, 2024 and April 1, 2023, respectively. The decrease in operating profit as a percentage of sales for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to the decrease in gross profit as a percentage of sales and the increase in payroll costs as a percentage of sales.
Investment income (loss)
Investment income for the three months ended March 30, 2024 and April 1, 2023 was $495 million and $328 million, respectively. Excluding the impact of net unrealized gains on equity securities in 2024 and 2023, investment income would have been $108 million and $82 million for the three months ended March 30, 2024 and April 1, 2023, respectively. Excluding the impact of net unrealized gains on equity securities in 2024 and 2023, the increase in investment income for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was due to the increase in interest and dividend income.
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Income tax expense
The effective income tax rate was 20.7% and 20.9% for the three months ended March 30, 2024 and April 1, 2023, respectively. The decrease in the effective income tax rate for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to the increased impact of permanent deductions and credits relative to earnings before income tax expense.
Net earnings
Net earnings were $1.4 billion or $0.41 per share and $1.2 billion or $0.37 per share for the three months ended March 30, 2024 and April 1, 2023, respectively. Net earnings as a percentage of sales were 9.1% and 8.7% for the three months ended March 30, 2024 and April 1, 2023, respectively. Excluding the impact of net unrealized gains on equity securities in 2024 and 2023, net earnings would have been $1.1 billion or $0.33 per share and 7.2% as a percentage of sales for the three months ended March 30, 2024 and $1.1 billion or $0.32 per share and 7.4% as a percentage of sales for the three months ended April 1, 2023. Excluding the impact of net unrealized gains on equity securities in 2024 and 2023, the decrease in net earnings as a percentage of sales for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to the decrease in operating profit as a percentage of sales, partially offset by the increase in interest and dividend income.
Non-GAAP Financial Measures
In addition to reporting financial results for the three months ended March 30, 2024 and April 1, 2023 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 March 30, 2024 and April 1, 2023:
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Amounts are in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 1,366 | 1,241 | |||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment, due to net unrealized gain, on equity securities held at end of period | (387) | (246) | ||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense (1) | 98 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings excluding impact of fair value adjustment | $ | 1,077 | 1,057 | |||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding | 3,297 | 3,328 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share excluding impact of fair value adjustment | $ | 0.33 | 0.32 | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Income tax expense 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 $15.5 billion as of March 30, 2024, as compared with $14.6 billion as of December 30, 2023 and $13.7 billion as of April 1, 2023. The increase from the first quarter of 2023 to the first quarter of 2024 was primarily due to the increase in the fair value of investments.
Net cash provided by operating activities
Net cash provided by operating activities was $1.7 billion and $1.5 billion for the three months ended March 30, 2024 and April 1, 2023, respectively. The increase in net cash provided by operating activities for the three months ended March 30, 2024 as compared with the three months ended April 1, 2023 was primarily due to the payment in 2023 of payroll taxes that were deferred under a coronavirus tax relief provision in 2020 and the timing of purchases of inventories, partially offset by the timing of collections for receivables. Income taxes paid in 2024 includes payments for 2023 that were deferred due to Hurricane Idalia. Income taxes paid in 2023 includes payments for 2022 that were deferred due to Hurricane Ian.
Net cash used in investing activities
Net cash used in investing activities was $1.2 billion and $757 million for the three months ended March 30, 2024 and April 1, 2023, respectively. The primary use of net cash in investing activities for the three months ended March 30, 2024 was funding capital expenditures and net increases in investments. Capital expenditures for the three months ended March 30, 2024 totaled $576 million. These expenditures were incurred in connection with the opening of 13 supermarkets (including three replacement supermarkets) and the remodeling of 30 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 March 30, 2024, the payment for investments, net of the proceeds from the sale and maturity of investments, was $598 million.
Net cash used in financing activities
Net cash used in financing activities was $619 million and $527 million for the three months ended March 30, 2024 and April 1, 2023, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $284 million and $209 million for the three months ended March 30, 2024 and April 1, 2023, 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 $329 million or $0.10 per share and $299 million or $0.09 per share during the three months ended March 30, 2024 and April 1, 2023, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2024 are expected to be approximately $1.9 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 2024, 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, increased interest rates, 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 cybersecurity threats, including 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 interest or inflation rates; 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 principal executive officer and principal 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 principal executive officer and principal 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 principal executive officer and principal 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 March 30, 2024 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 March 30, 2024 (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) | ||||||||||||||||||||||||||||||||||||||||
| December 31, 2023 - February 3, 2024 | 6 | $ | 15.10 | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| February 4, 2024 - March 2, 2024 | 5 | 15.10 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||
| March 3, 2024 - March 30, 2024 | 15 | 15.20 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||
Total | 26 | $ | 15.16 | 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 March 30, 2024 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
None
14
Item 6. Exhibits
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, 2024 | /s/ Merriann M. Metz | |||||||||
| Merriann M. Metz, Secretary | |||||||||||
| Date: | May 1, 2024 | /s/ David P. Phillips | |||||||||
| David P. Phillips, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | |||||||||||
16