Exhibit 99.1
Ingles Markets, Incorporated Announces Third Quarter Sales
and Earnings Increases
ASHEVILLE, N.C.--(BUSINESS WIRE)--July 31, 2006--Ingles Markets,
Incorporated (NASDAQ: IMKTA) today reported that net income increased
108.9% (from $6.6 million to $13.8 million) for the three months and
80.9% (from $17.2 million to $31.1 million) for the nine months ended
June 24, 2006, compared to the previous year. The earnings increases
were largely driven by broad-based sales increases and cost
efficiencies.
Net sales for the June 2006 quarter increased 16.3% over the June
2005 quarter to $659.2 million, while comparable grocery store sales
grew 15.2% for the same period. For the nine months ended June 24,
2006, net sales increased 12.2% over the 2005 period to $1.89 billion,
while comparable grocery store sales grew 11.0%. Excluding
high-dollar, lower-margin gasoline sales, comparable grocery store
sales grew 10.2% for the quarter and 7.7% for the nine-month period.
Easter sales occurred in the June quarter of fiscal 2006 and the
March quarter of fiscal 2005. Adjusted for the effect of Easter sales,
the Company estimates that third quarter 2006 comparable grocery store
sales increased 13.8%, compared to the third quarter of 2005.
Gross profit dollars for the three- and nine-month periods ended
June 2006 increased $20.0 million and $44.1 million, respectively,
compared to the same periods of fiscal 2005. Gross profit, as a
percentage of sales, decreased to 24.8% for the June 2006 quarter,
compared to 25.3% for the same quarter last year. For the nine-month
period, gross profit as a percentage of sales decreased to 24.9% in
2006 compared to 25.4% in 2005. The effect of lower overall margins in
the gasoline department was the primary contributor to the decrease in
gross profit as a percentage of sales. Excluding the effect of
gasoline sales, retail grocery segment gross margins for the fiscal
2006 three- and nine-month periods were within 50 basis points of such
margins for the same periods of 2005.
Operating and administrative expenses for the June 2006 quarter
decreased as a percentage of sales to 19.9% compared to 21.6% in the
June 2005 quarter. Operating and administrative expenses for the June
2006 nine-month period decreased as a percentage of sales to 20.6%
compared to 21.8% in the June 2005 nine-month period. Operating and
administrative expenses declined as a percentage of sales (both with
and without gasoline sales and expenses) due primarily to the
increased sales volume. Ingles operated 197 stores at the end of June
2006, compared to 195 stores at the end of June 2005.
Combined net rental income and other income, net totaled $1.8
million for the June 2006 quarter compared to $2.4 million for the
June 2005 quarter, and $5.3 million for the nine-month 2006 period
compared to $5.7 million for the nine-month 2005 period. Lower rental
income and higher shopping center expenses accounted for most of the
decreases.
Interest expense decreased $0.4 million and $1.8 million for the
three- and nine-month periods ended June 2006, respectively, compared
to the same periods ended June 2005 due to a reduction in total debt
from $579.7 million at June 25, 2005, to $555.4 million at June 24,
2006.
Net income for the June 2006 quarter totaled $13.8 million, 108.9%
higher than net income of $6.6 million for the June 2005 quarter.
Basic and diluted earnings per share for the Company's publicly traded
Class A common stock were $0.59 and $0.57 per share, respectively, for
the June 2006 quarter compared to $0.29 and $0.27 per share,
respectively, for the June 2005 quarter.
Net income for the nine months ended June 24, 2006 totaled $31.1
million, 80.9% higher than net income of $17.2 million for the nine
months ended June 25, 2005. Basic and diluted earnings per share for
the Company's publicly traded Class A common stock were $1.33 and
$1.27 per share, respectively, for the June 2006 nine-month period
compared to $0.75 and $0.71 per share, respectively, for the June 2005
nine-month period.
Robert P. Ingle, chief executive officer, stated, "Our good
results are sales driven. We've had successful promotions, improved
our store base and offered both convenience and value to our
customers. Our customer visits are up and they're purchasing more each
visit than they did last year. This growth also allows us to spread
fixed expenses over more sales dollars to the benefit of our customers
and shareholders."
During the June 2006 nine-month period, Ingles completed one new
store and three replacement stores, closed one store and purchased
seven future store sites. Including additions at new or replacement
stores, the Company added eight fuel stations and three pharmacies.
Capital expenditures for the June 2006 nine-month period totaled $66.8
million. For the balance of the fiscal year, Ingles expects to open
one remodeled store, purchase three sites for future expansion, and
add four new fuel stations and a pharmacy to existing store
properties. Capital expenditures for the entire fiscal year are
expected to be approximately $90 million, including expenditures for
stores to open in fiscal 2007.
The comments in this press release contain certain forward-looking
statements. Ingles undertakes no obligation to publicly release any
revisions to any forward-looking statements contained herein to
reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events, except as required by
law. Ingles' actual results may differ materially from those projected
in forward-looking statements made by, or on behalf of, Ingles.
Factors that may affect results include changes in business and
economic conditions generally in Ingles' operating area, pricing
pressures, increased competitive efforts by others in Ingles'
marketing areas and the availability of financing for capital
improvements. A more detailed discussion of these factors may be found
in reports filed by the Company with the Securities and Exchange
Commission including its 2005 Form 10-K and 2006 Forms 10-Q.
Ingles Markets, Incorporated is a leading supermarket chain with
operations in six southeastern states. Headquartered in Asheville,
North Carolina, the Company operates 197 supermarkets. In conjunction
with its supermarket operations, the Company also operates 74
neighborhood shopping centers, all but 17 of which contain an Ingles
supermarket. The Company's Class A Common Stock is traded on The
NASDAQ Stock Market's Global Market under the symbol IMKTA. For more
information about the Company, visit Ingles' website at
www.ingles-markets.com.
INGLES MARKETS, INCORPORATED
(Amounts in thousands except per share data)
Unaudited Financial Highlights
Three Months Ended Nine Months Ended
--------------------- ----------------------
June 24, June 25, June 24, June 25,
2006 2005 2006 2005
---- ---- ---- ----
Net sales $ 659,212 $ 566,656 $1,889,255 $1,683,198
Gross profit 163,151 143,123 471,237 427,103
Operating and
administrative
expenses 131,122 122,364 389,629 366,654
Rental income, net 1,431 1,838 4,016 4,389
Income from operations 33,460 22,597 85,624 64,838
Other income, net 446 638 1,266 1,323
Interest expense 12,184 12,592 36,737 38,550
Income taxes 7,880 4,017 19,100 10,448
Net income $ 13,842 $ 6,626 $ 31,053 $ 17,163
Basic earnings
per common
share - Class A $ 0.59 $ 0.29 $ 1.33 $ 0.75
Basic earnings
per common
share - Class B $ 0.54 $ 0.26 $ 1.21 $ 0.68
Diluted earnings
per common
share - Class A $ 0.57 $ 0.27 $ 1.27 $ 0.71
Diluted earnings
per common
share - Class B $ 0.54 $ 0.26 $ 1.21 $ 0.68
Additional selected
information:
Depreciation and
amortization expense $ 14,765 $ 13,798 $ 44,297 $ 42,288
Rent expense $ 5,359 $ 6,403 $ 16,598 $ 20,581
Condensed Consolidated Balance Sheets (Unaudited)
June 24, Sept. 24,
2006 2005
---- ----
ASSETS
Cash and cash equivalents $ 22,281 $ 50,626
Receivables-net 40,758 39,079
Inventories 216,754 204,113
Other current assets 11,287 10,639
Property and equipment-net 762,748 744,163
Other assets 17,150 17,385
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TOTAL ASSETS $ 1,070,978 $ 1,066,005
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of
long-term debt $ 12,174 $ 16,413
Accounts payable, accrued
expenses and current portion
of other long-term liabilities 189,792 184,462
Deferred income taxes 24,576 31,246
Long-term debt 543,271 553,015
Other long-term liabilities 4,163 4,020
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Total Liabilities 773,976 789,156
Stockholders' equity 297,002 276,849
------------ -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,070,978 $ 1,066,005
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CONTACT: Ingles Markets, Incorporated
Ron Freeman, 828-669-2941 (Ext. 223)