Ingles Markets Incorporated Announces First Quarter Results
Asheville, North Carolina (January 25, 1999) - Ingles Markets, Incorporated (Nasdaq-IMKTA) today announced financial results for the first quarter ended December 26, 1998.
Ingles achieved a substantial sales increase of 12.5% in the first quarter of fiscal 1999 over the same quarter last year, including impressive comparable store sales growth of 7.5%. Net income increased 43.3% to $4.1 million, or $0.18 per diluted share, for the December 1998 quarter compared with $2.8 million, or $0.13 per diluted share, for the same quarter last year.
Sales increases were achieved through successful marketing efforts, as well as the maturing of stores added, remodeled and replaced in prior years. The 7.5% comparable store sales growth is the highest comparable store sales increase the Company has experienced in 11 quarters.
Gross profit grew 13.4% from the prior year's quarter and was 24.4% of sales in the December 1998 quarter compared with 24.2% of sales in the December 1997 quarter.
Operating and administrative expenses remained constant at 21.2% of sales. Decreases, as a percentage of sales, in depreciation expense, salaries and wages, and warehouse expense were counterbalanced by increases, as a percentage of sales, in store equipment rental and group insurance costs.
Depreciation expense, as a percentage of sales, decreased partially due to increased sales. In addition, a $50 million sale/leaseback of store equipment in September 1998 effectively reduced depreciation expense and interest expense and increased store equipment rental expense. Salaries and wages, as a percentage of sales, declined due to increased sales volumes and improved labor scheduling efforts. Warehouse expenses, as a percentage of sales, declined due to economies achieved from increased sales and lower diesel fuel costs.
Net rental income increased to $2.2 million in the December 1998 quarter from $1.4 million in the same quarter last year, primarily due to the purchase of seven shopping centers in fiscal 1998.
Interest expense rose $1.4 million this year due mainly to debt incurred to fund capital expenditures. Capital expenditures totaled $155.9 million in fiscal 1998. Capital expenditures for the December 1998 quarter were $14.4 million and are currently projected to be approximately $75 million for fiscal 1999.
During the December 1998 quarter, Ingles opened two replacement stores, completed six minor remodels and closed one older store. In January 1999, Ingles closed three additional older stores.
COMMENTS BY ROBERT P. INGLE
Commenting on the results, Robert P. Ingle, chairman and chief executive officer, stated, "We are extremely pleased with the outstanding results we have achieved in our first quarter of fiscal 1999. Our entire management team has focused on bringing customers into our stores to see the exciting things we are doing. We have believed all along and continue to believe that the improvements we are making to our store base are the key to the Company's long-term success."
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. Ingles actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, Ingles. Factors that could cause actual results to differ are discussed in reports filed by the Company with the Securities and Exchange Commission, particularly its Form 10-K for fiscal year 1998.
(1) EBITDA represents earnings before interest, income taxes, depreciation and amortization, non-recurring charges and extraordinary items. Management believes that EBITDA is a useful measure of operating performance because it allows for a means of comparing Ingles with other companies that operate supermarkets, many of which do not own the real property on which the supermarkets are operated. EBITDA is unaffected by the debt and equity structure of Ingles. EBITDA does not represent cash flow from operations as defined by generally accepted accounting principles (GAAP), is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income under GAAP for evaluating Ingles’ results of operations.
Ingles Markets, Incorporated is a leading supermarket chain with operations in six southeastern states. Headquartered in Asheville, North Carolina, the Company operates 203 supermarkets. In conjunction with its supermarket operations, the Company also operates 80 neighborhood shopping centers, all but seven of which contain an Ingles supermarket. The Company's Class A Common Stock is traded on The Nasdaq Stock Market's National Market under the symbol: IMKTA.
Ingles Markets, Incorporated - Post Office Box 6676, Asheville, NC 28816 - http://www.ingles-markets.com
Chief Financial Officer
(828) 669-2941 (Ext. 223)