Weis Markets (WMK) investor relations material

Executive summary

• Q3 revenue rose 3.0% to $1.279B; net income increased 31.4% to $22.21M and diluted EPS rose to $0.90 from $0.69.

• 9M revenue increased 4.1% to $3.810B; net income grew 18.1% to $72.92M and diluted EPS was $2.95 versus $2.38.

• Q3 comps rose 1.3% including fuel and fell 1.2% excluding fuel; 9M comps increased 1.9% including fuel and declined 0.1% excluding fuel.

Financial highlights

• Q3 gross profit rose 5.8% to $324.61M; operating income increased 38.6% to $28.51M. 9M gross profit rose 7.8% to $983.26M; operating income increased 28.6% to $93.31M.

• Q3 gross margin was 25.5% versus 24.8%, and operating margin was 2.2% versus 1.7%; 9M gross margin was 25.9% versus 25.0%, and operating margin was 2.5% versus 2.0%.

• Q3 O,G&A rose 3.4% to $296.1M; 9M O,G&A increased 6.0% to $889.9M, reflecting higher employee, repair, outside-service and utility expenses.

• Q3 net income margin was 1.7% versus 1.4%; 9M was 1.9% versus 1.7%. Effective tax rates were 26.3% and 25.7%, respectively, versus 24.1% and 24.9%.

Outlook and guidance

• Category-level inflation and deflation are expected to vary; food inflation may be partly offset by pharmacy deflation tied to Medicare maximum fair price provisions and moderating fuel prices.

• Continued price investments and expanded loyalty marketing were cited to support customer value and affordability; people, process and technology investments target convenience and operating efficiency.

• Long-term sales growth remains a focus amid competitive pressures; capital spending, acquisitions, distribution facilities, repurchases and dividends may be funded by cash, securities, operating cash flow and the revolving facility.