Business Context and Reporting Period
Company: Weis Markets, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and nine months ended September 30, 1995.
Operations: Operates 150 supermarkets across six states and Weis Food Service. Also owns an 80% interest in SuperPetz, Inc., which operates 23 pet supply stores.
Key Financial Metrics
| Metric | Three Months Ended 9/30/95 | Nine Months Ended 9/30/95 |
|---|---|---|
| Net Sales | $404,578,000 | $1,209,655,000 |
| Gross Profit | $105,810,000 (26.2% margin) | $310,961,000 (25.7% margin) |
| Net Income | $19,189,000 | $56,629,000 |
| Earnings Per Share | $0.45 | $1.31 |
| Operating Cash Flow (9mo) | $78,075,000 | |
| Capital Expenditures (9mo) | $50,484,000 | |
| Cash and Marketable Securities | $458,820,000 (as of 9/30/95) | |
| Total Debt | None reported in liabilities |
Material Changes vs. Prior Period
- Sales Growth: Net sales increased 7.3% for the quarter and 8.2% year-to-date compared to 1994. Same-store sales rose 2.3% for the quarter and 1.7% year-to-date.
- Profitability: Net income increased 2.4% for the quarter and 5.0% year-to-date. Gross profit margins improved slightly (0.3% increase for the quarter).
- Expenses: Operating expenses increased 7.3% quarter-over-quarter, consistent with sales volume growth. Operating expense ratio remained flat at 20.8% of sales.
- Other Income: Decreased 20.1% for the quarter due to declining cardboard salvage prices, reversing a prior year increase.
- SuperPetz Impact: Pre-opening expenses for new pet supply stores resulted in $0 recorded minority interest income for the period, despite operational profitability.
Outlook, Management Commentary, and Risks
- Expansion Program: The company is executing its most aggressive expansion plan in history, allocating $105 million over 18 months for new stores and equipment. Construction is underway on four new stores with two major remodels.
- SuperPetz Growth: The pet supply subsidiary is growing faster than projected, with plans to open four additional stores in the fourth quarter of 1995.
- Liquidity: Capital requirements are funded entirely by internally generated funds. Management believes cash, short-term investments, and operating cash flow are sufficient to finance operations, dividends, and expansion.
- Dividends: Quarterly dividend increased to $0.21 per share from $0.19 in the prior year. A dividend of $0.21 was declared for November 1995.
- Treasury Stock: The company repurchased $11.4 million of its own stock year-to-date. Approximately 935,495 shares remain available under the current buyback authorization.
- Risks/Contingencies: Inflation in food prices is minimal, but pharmaceutical product costs have risen 10% year-over-year. Start-up costs for SuperPetz are expected to negatively impact results for the full year.
Investor Verification Checklist
- Verify the sustainability of the 2.3% same-store sales growth amidst minimal food inflation.
- Monitor the impact of rising pharmaceutical costs (up 10%) on future gross margins.
- Assess the timeline and cost overruns for the $105 million expansion program.
- Track the profitability timeline for the SuperPetz subsidiary given current pre-opening losses.
- Confirm the utilization of the remaining $11.5 million in marketable securities for capital expenditures versus continued buybacks.