Ingles reports higher sales, net income for first quarter

Ingles Markets Inc. today reported higher sales and net income for its first quarter, ended Dec. 30, 2017.

Total sales rose 3.2% to reach $1.01 billion, compared with $982.8 million in the year-ago quarter, and increase of $31.0 million. Same-store sales, excluding gasoline, increased 2.2%. Gasoline gallons sold increased while the average price-per gallon was stable compared with the December 2016 quarter. The number of customer transactions, excluding gasoline, was stable, while the comparable average transaction size, excluding gasoline, increased compared with the same quarter last year. Included in the first quarter net income is a reduction in non-cash deferred tax expenses of $26.7 million from changes to the federal income tax law.

Gross profit for the quarter rose to $244.7 million, or 24.1% of sales. Gross profit for the previous year’s first quarter was $237.1 million, also 24.1% of sales. Retail gross margins were unchanged.

Operating and administrative expenses for the quarter totaled $208.8 million, compared with $206.3 million in the year-ago quarter. Increased personnel costs accounted for much of the increase. Company officials said the 1.2% increase in operating expenses over the comparative quarters was less than increase in sales and gross profit.

“We are pleased with our sales during the important holiday season,” Robert P. Ingle, chairman of the Asheville, N.C.-based chain, said in a statement. “We opened two new stores and will continue to invest capital, improve our store base, and bring the best to our loyal customers.”

Capital expenditures totaled $56.8 million during the quarter, compared with $29.3 million a year ago. Ingles management primarily attributed the increase to the timing of capital expenditures on real estate, new stores and store remodels. Total fiscal 2018 capital expenditures are expected to be between $120 million and $160 million.

Interest expense totaled $11.5 million for the quarter, compared with $11.3 million a year ago. Total debt at the end of December was $890.5 million, compared with $900.2 million at the end of December 2016.

Ingles currently has a line of credit totaling $175 million, of which $150.8 million is currently available. The company believes its financial resources, including this line of credit and other internal and anticipated external sources of funds, will be sufficient to meet planned capital expenditures, debt service and working capital requirements for the foreseeable future.

Ingles operates 200 supermarkets in North Carolina, South Carolina, Georgia, Tennessee, Virginia and Alabama.

Unlike many retailers, Ingles is heavily involved in real estate, owning two-thirds of the real estate on which it operates stores. Many of those stores serve as anchors of company-owned strip centers.

Ingles also operates Milkco Inc., a wholly owned subsidiary milk processing and packaging plant purchased from Sealtest in 1982, that supplies its stores with milk and dairy products. Annual production has grown from 5 million gallons in 1992 to over 60 million gallons today. In addition to milk, Milkco provides other dairy products, citrus juices, ready-to-drink tea, ice cream mix and bottled water to foodservice distributors, grocery warehouses and independent specialty retailers in 10 states.

Company officials tout that Milkco is one of the few dairies in the U.S. that packages 100% of its products in recyclable corrugated boxes, instead of traditional plastic milk crates. Made of up to 25% recycled product, the corrugated shippers are said to provide additional temperature protection, as well as keeping their contents much cleaner during distribution.

As of midday trading on 1 p.m. Friday Feb. 9, Ingles stock was trading in the NASDAQ exchange at $30.85, up 70 cents.