WEIS MARKETS INC

Previous wording

Weis Markets is a conventional supermarket chain that operates 197 retail stores with approximately 23 thousand associates located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia, and West Virginia. Approximately 95% of Weis Markets associates are paid an hourly wage. Its products sold include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services at certain locations, deli products, prepared foods, bakery products, beer and wine, fuel, and general merchandise items, such as health and beauty care and household products. The store product selection includes national, local and private brands and the Company promotes competitive pricing by using Everyday Lower Price; Low Price Guarantee; Low, Low Price; 3 Day Sale; senior and military discounts; and Loyalty programs. The Loyalty program includes reward points that may be redeemed for discounts on items in store, at one of the Company’s fuel stations or one of its third-party fuel station partners.

Current wording

Weis Markets is a conventional supermarket chain that operates 198 retail stores with approximately 22 thousand employees located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia, and West Virginia. Approximately 94% of Weis Markets employees are paid an hourly wage. Its products sold include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services at certain locations, deli products, prepared foods, bakery products, beer and wine, fuel, and general merchandise items, such as health and beauty care and household products. The store product selection includes national, local and private brands and the Company promotes competitive pricing by using Everyday Lower Price; Low Price Guarantee; Low, Low Price; 3 Day Sale; senior and military discounts; and Loyalty programs. The Loyalty program includes reward points that may be redeemed for discounts on items in store, at one of the Company’s fuel stations or one of its third-party fuel station partners.

Previous wording

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 56% of product supplied to stores with the remaining being supplied by direct store vendors and regional wholesalers. In addition, the Company has three manufacturing facilities which process milk, water, ice, ice cream and fresh meat products. The corporate offices are located in Sunbury, Pennsylvania where the Company was founded in 1912.

Current wording

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 53% of product supplied to stores with the remaining being supplied by direct store vendors and regional wholesalers. In addition, the Company has three manufacturing facilities which process milk, water, ice, ice cream and fresh meat products. The corporate offices are located in Sunbury, Pennsylvania where the Company was founded in 1912.

Previous wording

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 188 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers in all 197 of its locations via multiple grocery delivery partners.

Current wording

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 190 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers at all 198 of its locations via multiple grocery delivery partners.

Previous wording

Management is providing Comparable Store Sales Two-Year Stacked analysis, a non-GAAP measure, because Management believes this metric is useful to investors and analysts. A Comparable Store Sales Two-Year Stacked analysis presents a comparison of results and trends over a longer period of time to demonstrate the effect of the novel coronavirus pandemic on the operating results of the Company. Information presented in the tables below is not intended for use as an alternative to any other measure of performance. It is not recommended that this table be considered a substitute for the Company’s operating results as reported in accordance with GAAP.

Current wording

Management is providing Comparable Store Sales Two-Year Stacked analysis, a non-GAAP measure, because Management believes this metric is useful to investors and analysts. Information presented in the tables below is not intended for use as an alternative to any other measure of performance. It is not recommended that this table be considered a substitute for the Company’s operating results as reported in accordance with GAAP.

Previous wording

According to the latest U.S. Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index increased 5.0% in 2023, 11.4% in 2022, 3.5% in 2021. Even though the U.S. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results. According to the U.S. Department of Energy, the 52-week average price of gasoline in the Central Atlantic States decreased 10.1%, or $0.42 cents per gallon, in 2023 compared to the 53-week average in 2022. The 53-week average price of gasoline in the Central Atlantic States, according to the U.S. Department of Energy, increased 31.4%, or $1.00 per gallon, in 2022 compared to the 52-week average in 2021.

Current wording

According to the latest U.S. Bureau of Labor Statistics’ report, the annual Food-at-Home Price Index increased 1.8% in 2024, adjusted, 5.0% in 2023 and 11.4% in 2022. Even though the U.S. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results. According to the U.S. Department of Energy, the 52-week average price of gasoline in the Central Atlantic States decreased 5.1%, or $0.19 cents per gallon, in 2024 compared to the 52-week average in 2023. The 52-week average price of gasoline in the Central Atlantic States, according to the U.S. Department of Energy, decreased 10.1%, or $0.42 per gallon, in 2023 compared to the 53-week average in 2022.

Previous wording

Comparable store sales, excluding fuel and adjusted for the 53rd week in 2022, increased for allyears presented. Comparable store sales, including fuel, decreased year over year. On a comparable store sales basis pharmacy services increased in sales. Comparable store sales, adjusted for an additional week in 2022 increased 2.3% excluding fuel and 1.7% including fuel for 2023 compared to 2022. The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 188 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers in all 197 of its locations via multiple grocery delivery partners.

Current wording

Comparable store sales, excluding fuel and adjusted for the 53rd week in 2022, increased for all years presented. Comparable store sales, including fuel, increased in 2024 compared to 2023, which decreased when compared to 2022. On a comparable store sales basis pharmacy services increased in sales driven by the increased number of filled prescriptions. Comparable store sales increased 1.9% excluding fuel and 1.7% including fuel for 2024 compared to 2023. The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 190 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers in all 198 of its locations via multiple grocery delivery partners.

Previous wording

During 2023, the Company’s net sales were negatively impacted by declining government benefits. Although the Company experienced retail inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary indicators in the food retail industry. Management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors. Management remains confident in its ability to generate long-term sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company’s competitive position.

Current wording

Although the Company experienced retail inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary indicators in the food retail industry. Management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors. Management remains confident in its ability to generate long-term sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company’s competitive position.

Previous wording

Gross profit rate was 24.7% in 2023, 25.2% in 2022, 26.4% in 2021. The decrease in gross profit rate is attributable to increased pharmacy and fuel sales, which have a lower gross profit margin than grocery sales; and higher product and supply chain costs.

Current wording

Gross profit rate was 25.2% in 2024, 25.1% in 2023, and 25.6% in 2022. The increase in gross profit rate is attributable to increased grocery sales, which have a higher gross profit margin than pharmacy and fuel sales.

Previous wording

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $6.7 million, $29.2 million and $4.0 million in 2023, 2022 and 2021, respectively.

Current wording

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $608 thousand, $6.7 million and $29.2 million in 2024, 2023 and 2022, respectively.

Previous wording

Employee-related costs 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 apercent of sales, direct store labor increased 0.1% in 2023 compared to 2022 and decreased 0.5% in 2022 compared to 2021. Direct store labor expenses increased slightly in 2023 compared to 2022 due to flat net sales results for the same period. Direct store labor increased in 2022 compared to 2021, as sales increases outpaced the labor expense increase causing the rate to fall, primarily due to the fixed component of store labor. Management continues to monitor store labor efficiencies and develop labor standards to reduce costs while maintaining the Company’s customer service expectations. During 2023, the Company completed a multi-year initiative to install or upgrade self-checkouts in its stores in response to customer preference and labor supply, including adding convertible dual-use checkout lanes.

Current wording

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 55.7% of the total “Operating, general and administrative expenses.” As apercent of sales, direct store labor increased by 0.2% in 2024 compared to 2023 and increased 0.1% in 2023 compared to 2022. Direct store labor expenses increased in 2024 compared to 2023 due to increased wage expenses for hourly employees. Direct store labor increased slightly in 2023 compared to 2022 due to flat net sales results for the same period. Management continues to monitor store labor efficiencies and develop labor standards to reduce costs while maintaining the Company’s customer service expectations. During 2023, the Company completed a multi-year initiative to install or upgrade self-checkouts in its stores in response to customer preference and labor supply, including adding convertible dual-use checkout lanes.

Previous wording

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $98.0 million, or 2.1% of net sales, for 2023 compared to $94.6 million, or 2.0% of net sales, for 2022 compared to $93.8 million, or 2.2% of net sales, for 2021. 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 $102.8 million, or 2.2% of net sales, for 2024 compared to $98.0 million, or 2.2% of net sales, for 2023 compared to $94.6 million, or 2.0% of net sales, for 2022. See the Liquidity and Capital Resources section for further information regarding the Company’s capital expenditure program.

Previous wording

The majority of the increases in other expenses from 2022 to 2023 were technology expenses due to more third-party information technology subscription and consulting services and less asset disposals and insurance proceeds. The majority of the increases in other expenses from 2021 to 2022 were higher financial service fees due to more sales transaction dollars paid with debit and credit cards and more third-party information technology subscription and consulting services.

Current wording

The majority of the decrease in other expenses to 2023 from 2022 were technology expenses due to more third-party information technology subscription and consulting services offset by less asset disposals and insurance proceeds.

Previous wording

The effective income tax rate was 29.2%, 22.1% and 26.6% in 2023, 2022, and 2021, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee-related expenses. The Company reduced its provision for income taxes by $5.5 million in 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022. The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031.

Current wording

The effective income tax rate was 26.8%, 29.2% and 22.1% in 2024, 2023, and 2022, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee-related expenses. The Company reduced its provision for income taxes by $5.5 million in 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022. The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031, offset by taxable income changes, inclusive of, updating market sourcing rules, and codifying the economic nexus standard.

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 December 30, 2023, the availability under the revolving credit agreement was $22.3 million with $7.7 million of letters of credit outstanding. 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 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 December 28, 2024, the availability under the revolving credit agreement was $14.5 million with $15.5 million of letters of credit outstanding. 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 with maturity dates between one and 30 years and four high yield, large capitalized public company equity securities. The portfolio totaled $226.0 million as of December 30, 2023. Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed. See “Item 7a. Quantitative and Qualitative Disclosures about Market Risk” for more details regarding the Company’s market risk.

Current wording

The Company’s investment portfolio consists of high-grade bonds with maturity dates between one and 30 years and four high yield, large capitalized public company equity securities. The portfolio totaled $192.0 million as of December 28, 2024. Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed. See “Item 7a. Quantitative and Qualitative Disclosures about Market Risk” for more details regarding the Company’s market risk.

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 reinvest 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. The Company anticipates to fund the long-term capital expenditure program, the acquisition of retail stores, the construction of additional distribution facilities, repurchases of common stock, and cash dividends on common stock through its cash and cash equivalents, marketable securities, cash flows from operating activities, and revolving credit agreement.

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. The Company completed the purchase of a store located in Newville, Pennsylvania in the first quarter of 2025. Management continues to reinvest in its long-term capital expenditure program including plans to complete multiple carryover projects from prior years that were delayed due to labor and supply chain disruptions. The Company anticipates to fund the long-term capital expenditure program, the acquisition of retail stores, the construction of additional distribution facilities, repurchases of common stock, and cash dividends on common stock through its cash and cash equivalents, marketable securities, cash flows from operating activities, and revolving credit agreement.

Previous wording

Total cash dividend payments on common stock, on a per share basis, amounted to $1.36 in 2023, $1.30 in 2022 and $1.25 in 2021. The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022. 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 financial condition of the Company, results of operations and other factors which the Board of Directors deems relevant.

Current wording

Total cash dividend payments on common stock, on a per share basis, amounted to $1.36 in 2024, $1.36 in 2023 and $1.30 in 2022. The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022. 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 financial condition of the Company, results of operations and other factors which the Board of Directors deems relevant.

Previous wording

Cash flows from operating activities decreased in 2023 as compared to 2022 and 2021, respectively. The decrease in 2023 from 2022 is due to lower net income and in 2022 from 2021 is due to increases in inventory.

Current wording

Cash flows from operating activities decreased in 2024 as compared to 2023 and 2022. The decrease in 2024 from 2023 is due to increased value of inventory on hand due to timing of New Year’s selling period and in 2023 from 2022 is due to lower net income.

Previous wording

Property and equipment purchases totaled $104.0 million in 2023, $122.2 million in 2022 and $151.8 million in 2021. As a percentage of sales, capital expenditures totaled 2.2% in 2023, 2.5% in 2022 and 3.6% in 2021. Multiple projects from 2022 and 2023 are expected to be completed in 2024 due to labor and supply chain disruptions. The Company significantly increased its marketable securities holdings in 2023 by approximately $39.5 million and in 2022 the Company maintained its marketable securities portfolio.

Current wording

Property and equipment purchases totaled $168.5 million in 2024, $104.0 million in 2023 and $122.2 million in 2022. As apercentage of sales, capital expenditures totaled 3.5% in 2024, 2.2% in 2023 and 2.5% in 2022. The Company decreased its marketable securities holdings in 2024 by $34.0 million to fund the increase in capital expenditures and increased its marketable securities holdings in 2023 by approximately $39.5 million and in 2022 the Company maintained its marketable securities portfolio. In 2024, the Company purchased two previously leased store locations. The Company also completed a business acquisition in 2024, for which cash consideration totaled $16.2 million.

Previous wording

The Company paid dividends of $36.6 million in 2023, $35.0 million in 2022 and $33.6 million in 2021. The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022. The Company previously increased its quarterly dividend from 31 cents per share to 32 cents per share in the fourth quarter of 2021.

Current wording

The Company paid dividends of $36.6 million in 2024, $36.6 million in 2023 and $35.0 million in 2022. The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022.

Previous wording

The Company leases approximately 49% of its open store facilities under operating leases that expire at various dates through 2036, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on apercentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment. The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

Current wording

The Company leases approximately 47% of its open store facilities under operating leases that expire at various dates through 2038, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on apercentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment. The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

Previous wording

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims. The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported. The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported. The Company is self-insured for certain healthcare claims and stop-loss coverage is maintained for individual annual claim occurrences exceeding a $500 thousand specific deductible. The Company is liable for workers’ compensation claims ranging from $1.0 million to $2.0 million per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $250 thousand to $1.0 million. Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

Current wording

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and employee medical benefit claims. The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported. The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported. The Company is self-insured for certain healthcare claims and stop-loss coverage is maintained for individual annual claim occurrences exceeding a $600 thousand specific deductible. The Company is liable for workers’ compensation claims ranging from $1.0 million to $2.0 million per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $250 thousand to $1.0 million. Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.