WEIS MARKETS INC

Previous wording

Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to fluctuations caused by declining government benefits, pharmacy sales growth, the Easter holiday shift to the first quarter of fiscal 2024 from the second quarter of fiscal 2023 and inflationary trends in the food retail industry, management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis. The following tables provide the two-year stacked comparable store sales, including and excluding fuel, for the periods ended March 30, 2024, and April 1, 2023, as well as periods ended April 1, 2023, and March 26, 2022, respectively. Comparable store sales increased 3.1 percent on an individual year-over-year basis and increased 6.2 percent on a two-year stacked basis for the thirteen weeks ended March 30, 2024.

Current wording

Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to fluctuations caused by declining government benefits, pharmacy sales growth, the Easter holiday shift to the first quarter of fiscal 2024 from the second quarter of fiscal 2023 and inflationary trends in the food retail industry, management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis. The following tables provide the two-year stacked comparable store sales, including and excluding fuel, for the periods ended June 29, 2024, and July 1, 2023, as well as periods ended July 1, 2023, and June 25, 2022, respectively. Comparable store sales increased 0.5 percent on an individual year-over-year basis and increased 4.0 percent on a two-year stacked basis for the thirteen weeks ended June 29, 2024. Comparable store sales increased 1.8 percent on an individual year-over-year basis and increased 5.1 percent on a two-year stacked basis in the twenty-six weeks ended June 29, 2024.

Previous wording

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.

Current wording

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are

Previous wording

According to the latest U.S. Bureau of Labor Statistics’ report, the Seasonally Adjusted Food-at-Home Consumer Price Index increased 1.6% and 0.4% for the thirteen week periods ended March 30, 2024 and April 1, 2023, respectively. According to the U.S. Department of Energy, the average price of gasoline in the Central Atlantic States decreased 5.0% or $0.18 per gallon in the thirteen weeks ended March 30, 2024, compared to the same period in 2023. Even though the U.S. Bureau of Labor Statistics’ and the U.S. Department of Energy indices may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results.

Current wording

According to the latest U.S. Bureau of Labor Statistics’ report, the Seasonally Adjusted Food-at-Home Consumer Price Index increased 0.1% and 0.2% for the thirteen week periods ended June 29, 2024 and July 1, 2023, respectively. The Seasonally Adjusted Food-at-Home Consumer Price Index increased 0.9% and 0.2% for twenty-six week periods ended June 29, 2024 and July 1, 2023, respectively. According to the U.S. Department of Energy, the average price of gasoline in the Central Atlantic States increased 0.5% or $0.02 per gallon in the thirteen weeks ended June 29, 2024, compared to the same period in 2023. The average price of gasoline in the Central Atlantic States decreased 7.9% or $0.29 per gallon in the first twenty-six weeks of 2024 when compared to the same period in 2023. Although the U.S. Bureau of Labor Statistics’ and the U.S. Department of Energy indices may be reflective of broader trends, they will not necessarily be indicative of the Company’s actual results.

Previous wording

Total net sales for the thirteen weeks ended March 30, 2024, compared to the same period in 2023 increased 3.3% excluding fuel and 2.9% including fuel. Total net sales adjusted for the Easter holiday shift for the thirteen weeks ended March 30, 2024, compared to the same period in 2023 increased 2.0%. The Company’s first quarter sales benefited from the Easter holiday period, which occured in the second quarter last year. Management estimates the incremental holiday sales impact was approximately $14.0 million.

Current wording

Total net sales increased 0.2% to $1.2 billion for the thirteen weeks ended June 29, 2024, from $1.2 billion for the thirteen weeks ended July 1, 2023. In the twenty-six weeks ended June 29, 2024, total net sales increased 1.6% to $2.4 billion from $2.3 billion. The Company’s second quarter sales were negatively impacted from the Easter holiday period, which occurred in the first quarter this year and second quarter last year. Management estimates the incremental holiday sales impact was approximately $14.0 million. Comparable store sales for the thirteen weeks ended June 29, 2024, compared to the same period in 2023 increased 0.5% including fuel and 0.3% excluding fuel. Comparable store sales for the twenty-six weeks ended June 29, 2024, compared to the same period in 2023 increased 1.8% including and excluding fuel.

Previous wording

Non-cash LIFO inventory valuation adjustments represent expense of $1.4 million in the first thirteen weeks of 2024 compared to expense of $1.6 million in the same period in 2023. Although the Company experienced cost inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary trends in the food retail industry.

Current wording

Non-cash LIFO inventory valuation adjustments represent expense of $2.2 million in the first twenty-six weeks of 2024 compared to expense of $2.9 million in the same period in 2023. Although the Company experienced cost inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary trends in the food retail industry.

Previous wording

Employee expenses such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 59.2% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor was unchanged in the thirteen week period ended March 30, 2024 when compared to the same period in 2023.

Current wording

Employee expenses such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 59.9% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor increased 0.3% and increased 0.2% in the thirteen and twenty-six week periods ended June 29, 2024 when compared to the same periods in 2023, respectively.

Previous wording

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $24.8 million, or 2.1% of net sales during the thirteen weeks ended March 30, 2024 compared to $24.1 million, or 2.1% of net sales during the thirteen weeks ended April 1, 2023. See the Liquidity and Capital Resources section for further information regarding the Company’s capital expenditure program.

Current wording

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $25.2 million, or 2.1% of net sales during the thirteen weeks ended June 29, 2024 compared to $24.8 million, or 2.1% of net sales during the thirteen weeks ended July 1, 2023. During the first twenty-six weeks of 2024 and 2023, depreciation and amortization expense charged to “Operating, general and administrative expenses” was $50.0 million, or 2.1% of net sales and $48.9 million, or 2.1% of net sales, respectively. See the Liquidity and Capital Resources section for further information regarding the Company’s capital expenditure program.

Previous wording

Overall, the operating, general and administrative expenses as a percent of sales presented for the thirteen weeks ended March 30, 2024 increased in comparison with the 2023 percent of sales. Associate wages and third party services, mainly financial service fees and IT expenses, have increased in dollars as well as a percent of sales for the thirteen weeks ended March 30, 2024 and associate insurance benefits have decreased in dollars as well as a percent of sales.

Current wording

Overall, the operating, general and administrative expenses as a percent of sales presented for the thirteen and twenty-six weeks ended June 29, 2024 increased in comparison with the 2023 percent of sales. Employee expenses and third party services, mainly financial service fees and IT expenses, have increased in dollars as well as a percent of sales for the thirteen and twenty-six weeks ended June 29, 2024.

Previous wording

The effective income tax rate was 26.5% and 26.6% for the thirteen weeks ended March 30, 2024 and April 1, 2023, respectively. The effective income tax rate differed from the federal statutory rate, primarily due to the effect of state taxes, net of permanent differences.

Current wording

The effective income tax rate was 26.9% and 27.1% for the twenty-six weeks ended June 29, 2024 and July 1, 2023, respectively. The effective income tax rate differed from the federal statutory rate, primarily due to the effect of state taxes, net of permanent differences.

Previous wording

The primary source of cash is cash flows generated from operations. In addition, the Company has access to a revolving credit agreement entered into on September 1, 2016, and amended on September 29, 2023, with Wells Fargo Bank, N.A. (the “Credit Agreement”). The Credit Agreement matures on October 1, 2027, and provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of March 30, 2024, the availability under the revolving credit agreement was $22.3 million, net of $7.7 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company has not had an obligation on the Credit Agreement since the second quarter of 2018.

Current wording

The primary source of cash is cash flows generated from operations. In addition, the Company has access to a revolving credit agreement entered into on September 1, 2016, and last amended on September 29, 2023, with Wells Fargo Bank, N.A. (the “Credit Agreement”). The Credit Agreement matures on October 1, 2027, and provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of June 29, 2024, the availability under the Credit Agreement was $13.2 million, net of $16.8 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company has not had an obligation on the Credit Agreement since the second quarter of 2018.

Previous wording

The Company’s investment portfolio consists of high-grade bonds and commercial paper with maturity dates between one and 30 years and four high yield, large capitalized public company equity securities. The portfolio totaled $261.3 million as of March 30, 2024. Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

Current wording

The Company’s investment portfolio consists of high-grade bonds and commercial paper with maturity dates between one and 30 years and four high yield, large capitalized public company equity securities. The portfolio totaled $235.1 million as of June 29, 2024. Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

Previous wording

The Company’s capital expenditure program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet. Management continues to invest in its long-term capital expenditure program including plans to complete multiple carryover projects from 2022 and 2023 that were delayed due to labor and supply chain disruptions.

Current wording

The Company’s capital expenditure program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet. Management continues to invest in its long-term capital expenditure program including plans to complete multiple carryover projects from previous years that were delayed due to labor and supply chain disruptions.

Previous wording

The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares.

Current wording

The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares, and no repurchases were made during the quarter ended June 29, 2024.

Previous wording

At its regular meeting held in May, the Board of Directors declared a quarterly dividend of $0.34 per share, payable on May 28, 2024, to shareholders of record on May 13, 2024. The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors reconsiders the declaration of dividends quarterly. The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments and the amount of the dividends depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant.

Current wording

At its regular meeting held in July, the Board of Directors declared a quarterly dividend of $0.34 per share, payable on August 12, 2024, to shareholders of record on July 29, 2024. The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors reconsiders the declaration of dividends quarterly. The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments and the amount of the dividends depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant.

Previous wording

Cash flows from operating activities increased $26.3 million in the first thirteen weeks of 2024 compared to the first thirteen weeks of 2023. The increase in cash flow from operating activities is primarily due to less inventory purchases and settling fewer working capital obligations in the first thirteen weeks of 2024 when compared to the same period in 2023.

Current wording

Cash flows from operating activities decreased $5.9 million in the first twenty-six weeks of 2024 compared to the first twenty-six weeks of 2023. The decrease in cash flow from operating activities is primarily due to less net income when compared to the same period in 2023.

Previous wording

In the first thirteen weeks of 2024, when compared to the same period in 2023, the purchase of property and equipment, net of proceeds from sales, increased $17.8 million and the purchases of marketable securities, net of proceeds from sales, increased by $10.4 million. Additionally, as a percent of sales, capital expenditures were 2.5% in the first thirteen weeks of 2024 and 1.6% in the first thirteen weeks of 2023. The increase as a percent of sales in 2024 compared to 2023 is due to the purchase of two previously leased store locations. For the remainder of 2024, management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

Current wording

In the first twenty-six weeks of 2024, when compared to the same period in 2023, the purchase of property and equipment, net of proceeds from sales, increased $15.6 million and the purchases of marketable securities, net of proceeds from sales and maturities, decreased $21.1 million. Additionally, as a percent of sales, capital expenditures were 2.8% in the first twenty-six weeks of 2024 and 2.1% in the first twenty-six weeks of 2023. The increase as a percent of sales in 2024 compared to 2023 is due to the purchase of two previously leased store locations. For the remainder of 2024, management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

Previous wording

The Company paid dividends of $9.1 million and $9.1 million in the first thirteen weeks of 2024 and 2023, respectively.

Current wording

The Company paid dividends of $18.3 million in the first twenty-six weeks of 2024 and 2023.

Previous wording

In addition to historical information, this Form 10-Q report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; business conditions in the retail industry; the regulatory environment; rapidly changing technology and competitive factors, including increased competition with regional and national retailers; and price pressures. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect Management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.

Current wording

In addition to historical information, this Form 10-Q report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; business conditions in the retail industry; the regulatory environment; rapidly changing technology, including cybersecurity and data privacy risks, and competitive factors, including increased competition with regional and national retailers; and price pressures. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect Management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.