Exhibit 99.1
Ingles Markets, Incorporated Announces
Third Quarter Sales and Earnings Increases
ASHEVILLE, N.C.--(BUSINESS WIRE)--Aug. 3, 2007--Ingles Markets,
Incorporated (NASDAQ: IMKTA) today reported a 42.6% increase in net
income and a 12.1% increase in net sales for the three months ended
June 30, 2007, compared to the previous year. For the first nine
months of fiscal year 2007, net income increased 43.0% and net sales
increased 11.5% compared to the first nine months of fiscal year 2006.
Nine-month fiscal 2007 net income of $44.4 million is a record for the
Company, and exceeds record full-year earnings of $42.6 million
achieved in fiscal 2006.
Third Quarter Results
Net sales increased by $79.5 million to $738.7 million for the
June 2007 quarter, while grocery segment comparable store sales grew
11.9% for the same period. This is the Company's 17th consecutive
quarter of comparable store sales growth. Sales growth was broad-based
across the Company's departments, including increases in the number of
customer visits and in average purchase amount. Excluding gasoline
sales, third quarter comparable store sales increased 9.4%. Total
gasoline gallons sold increased approximately 27.0% while the average
price per gas gallon was approximately 16 cents higher comparing the
June fiscal 2007 quarter to the same period of fiscal 2006. At
June 30, 2007, Ingles operated 196 stores and 42 fuel centers compared
to 197 stores and 34 fuel centers at June 24, 2006.
Gross profit for the June 2007 quarter increased 6.7%, to $175.2
million, an increase of $11.0 million compared with the third quarter
of last fiscal year. Gross profit, as a percentage of sales, was 23.7%
for the June 2007 quarter compared with 24.9% for the June 2006
quarter. Gross profit as a percentage of sales decreased primarily due
to higher relative sales growth in the gasoline department that has
lower gross margins. Excluding gasoline sales, grocery segment gross
profit as a percentage of sales was 26.6% for the three months ended
June 30, 2007, compared to 27.2% for the same quarter of last fiscal
year. Food cost increases and competitive pressures also contributed
to lower grocery segment margins. The Company elected to accept lower
margins in order to increase sales, maintain market share and keep
prices low for its customers.
For the third consecutive comparative quarter of this fiscal year,
operating and administrative expenses improved as a percentage of
sales. This ratio was 19.2% for the June 2007 quarter compared to
20.0% in the June 2006 quarter. Operating and administrative expense
dollars increased $9.6 million to $141.8 million for the June 2007
quarter compared to the same quarter last year but, as noted above,
the expense increases were leveraged against an even greater sales
increase. Increased expenses for wages, warehouse operations, and
store supplies are all closely related to efforts to build sales and
capture market share. Other expense increases for insurance, utilities
and fuel are in line with overall market increase in these costs.
Net rental income and other income totaled $9.7 million for the
June 2007 quarter compared with $1.8 million for the June 2006
quarter. During the June 2007 quarter the Company sold a shopping
center where it had recently closed a store. Net proceeds from the
sale of approximately $14.0 million generated a pre-tax gain, included
in other income, of approximately $7.9 million.
Interest expense decreased $0.3 million for the three-month period
ended June 30, 2007, to $11.9 million from $12.2 million for the
three-month period ended June 24, 2006. Total debt at June 30, 2007,
was $550.6 million compared to $555.4 million at June 24, 2006.
Income tax expense as a percentage of pre-tax income increased to
36.9% in the June 2007 quarter compared to 36.3% in the June 2006
quarter due to lower amounts of tax exempt interest income and lower
deductions related to the exercise of employee stock options.
Net income increased $5.9 million, or 42.6%, for the three-month
period ended June 30, 2007, to $19.7 million, compared to $13.8
million for the three-month period ended June 24, 2006. Net income, as
a percentage of sales, improved to 2.7% for the June 2007 quarter
compared with 2.1% for the June 2006 quarter. Basic and diluted
earnings per share for publicly traded Class A Common Stock were $0.84
and $0.81 for the June 2007 quarter compared to $0.59 and $0.57,
respectively, for the June 2006 quarter. Basic and diluted earnings
per share for Class B Common Stock were each $0.77 for the June 2007
quarter compared to $0.54 of basic and diluted earnings per share for
the June 2006 quarter.
Nine Months Results
Net sales increased by $216.3 million, or 11.5%, to $2.11 billion
for the nine months ended June 2007. For the first time in the
Company's 44 year history, sales exceeded $2 billion after three
quarters. Grocery segment comparable store sales grew 11.6% for the
same period compared with the nine months ended June 2006. Excluding
gasoline sales, third quarter comparable store sales increased 8.6%.
Total gasoline gallons sold increased approximately 50% while the
average price per gas gallon was somewhat level comparing the June
fiscal 2007 nine months to the same period of fiscal 2006.
Gross profit dollars for the June 2007 nine-month period increased
$32.4 million, or 6.8%, to $506.7 million, compared to $474.3 million
for the same period of fiscal 2006. Gross profit as a percentage of
sales was 24.1% and 25.1% for the nine months ended June 30, 2007 and
June 24, 2006, respectively. Excluding gasoline sales, grocery segment
gross profit as a percentage of sales was 26.7% for the nine months
ended June 30, 2007, compared to 27.0% for the same period of last
fiscal year.
Operating expenses increased $25.1 million comparing the first
nine months of fiscal 2007 to the same period of last fiscal year, but
decreased to 19.8% of sales for the nine months ended June 30, 2007,
from 20.8% of sales for the nine months of fiscal year 2006. The
dollar cost increases that affected the third quarter, as discussed
above, were partially offset by decreased rent expense on equipment
and store properties.
Net rental income and other income totaled $12.8 million for the
June 2007 nine-month period compared to $5.3 million for the June 2006
nine-month period. The shopping center sale addressed in the above
third quarter analysis is the predominant reason for the increase.
Interest expense totaled $35.8 million for the nine-month period
ended June 30, 2007, a decrease of $0.9 million from $36.7 million for
the nine-month period ended June 24, 2006. Between June 2006 and June
2007, the Company paid down $26.9 million of mortgage debt. During the
June 2007 quarter, borrowings under the Company's $150 million line of
credit facilities increased $21.2 million to a total of $25.1 million
at quarter end.
Income tax expense as a percentage of pre-tax income decreased to
32.7% for the June 2007 nine-month period compared to 38.1% for the
comparable June 2006 period. During the second quarter of fiscal 2007,
the Company settled a tax position under an initiative offered by one
of the states in which the Company conducts its operations. As a
result of this settlement, the Company reduced its reserve for
contingent income taxes by $3.2 million and reduced income tax expense
by the same amount.
Net income increased $13.3 million, or 43.0%, for the nine-month
period ended June 30, 2007, to $44.4 million, compared to $31.1
million for the nine-month period ended June 24, 2006. Net income, as
a percentage of sales, was 2.1% for the June 2007 and 1.6% for the
June 2006 nine-month periods, respectively. Basic and diluted earnings
per share for publicly traded Class A Common Stock were $1.90 and
$1.81 for the June 2007 nine-month period compared to $1.33 and $1.27,
respectively, for the June 2006 quarter nine-month period. Basic and
diluted earnings per share for Class B Common Stock were each $1.73
for the fiscal June 2007 period compared to $1.21 of basic and diluted
earnings per share for the same fiscal period ended June 2006.
Robert P. Ingle, chief executive officer, stated, "We're pleased
with the sales increases in our existing stores as well as the
contribution from our recent new and remodeled stores. We have
ambitious plans to continue to improve our store base for the benefit
of our customers and shareholders and look forward to updating you on
our progress."
During the June 2007 nine-month period, Ingles completed one new
store, two remodeled stores, one replacement store, one convenience
store/fuel center, and purchased 11 land parcels for future store and
distribution development. The Company added six fuel centers and three
pharmacies either in conjunction with the store development activities
mentioned above or to existing store locations. Capital expenditures
for the June 2007 nine-month period totaled $96.4 million and are
expected to be approximately $120 million for the full fiscal year,
including expenditures for stores to open in fiscal 2008. For the
balance of the fiscal year, Ingles expects to open one owned remodeled
store, one owned new store, one leased replacement store, purchase two
sites for future store and fluid dairy expansion and add two new fuel
stations and one pharmacy to existing stores.
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 2006 Form 10-K and 2007 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 196 supermarkets. In conjunction
with its supermarket operations, the Company also operates 71
neighborhood shopping centers, all but 16 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, 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 30, June 24, June 30, June 24,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net sales $ 738,695 $ 659,212 $2,105,558 $1,889,255
Gross profit 175,228 164,193 506,659 474,255
Operating and
administrative expenses 141,787 132,164 417,749 392,647
Rental income, net 1,248 1,431 3,552 4,016
Income from operations 34,689 33,460 92,462 85,624
Other income, net 8,461 446 9,316 1,266
Interest expense 11,861 12,184 35,803 36,737
Income taxes 11,543 7,880 21,555 19,100
Net income $ 19,746 $ 13,842 $ 44,420 $ 31,053
Basic earnings per common
share - Class A $ 0.84 $ 0.59 $ 1.90 $ 1.33
Basic earnings per common
share - Class B $ 0.77 $ 0.54 $ 1.73 $ 1.21
Diluted earnings per
common share - Class A $ 0.81 $ 0.57 $ 1.81 $ 1.27
Diluted earnings per
common share - Class B $ 0.77 $ 0.54 $ 1.73 $ 1.21
Additional selected
information:
Depreciation and
amortization expense $ 15,408 $ 14,836 $ 44,756 $ 44,297
Rent expense $ 3,762 $ 5,359 $ 12,393 $ 16,598
Condensed Consolidated Balance Sheets (Unaudited)
June 30, Sept. 30,
2007 2006
---------- ----------
ASSETS
Cash and cash equivalents $ 17,244 $ 17,540
Receivables-net 44,935 43,594
Inventories 231,571 215,369
Other current assets 9,856 9,315
Property and equipment-net 820,223 771,628
Other assets 12,420 17,528
---------- ----------
TOTAL ASSETS $1,136,249 $1,074,974
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term
debt $ 52,362 $ 33,666
Accounts payable, accrued expenses
and current portion of other
long-term liabilities 205,259 185,195
Deferred income taxes 37,269 22,673
Long-term debt 498,251 522,649
Other long-term liabilities 5,338 6,118
---------- ----------
Total Liabilities 798,479 770,301
Stockholders' equity 337,770 304,673
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,136,249 $1,074,974
========== ==========
CONTACT: Ingles Markets, Incorporated
Ron Freeman, 828-669-2941, Ext. 223
Chief Financial Officer