UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2022

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to_________

Commission File Number 1-5039

WEIS MARKETS, INC.

(Exact name of registrant as specified in its charter)


Pennsylvania		24-0755415
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 S. Second Street
P. O. Box 471		17801-0471
Sunbury, Pennsylvania		(Zip Code)
(Address of principal executive offices)


Registrant’s telephone number, including area code: (570) 286-4571	Registrant’s web address: www.weismarkets.com

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer [ ]		Accelerated filer [X]
Non-accelerated filer [ ]		Smaller reporting company [ ]
		Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Securities registered pursuant to section 12(b) of the act:


Title of each class	Trading symbol	Name of exchange on which registered
Common stock, no par value	WMK	New York Stock Exchange

As of May 5, 2022, there were issued and outstanding 26,898,443 shares of the registrant’s common stock.

WEIS MARKETS, INC.

TABLE OF CONTENTS


FORM 10-Q		Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets		1
Consolidated Statements of Income		2
Consolidated Statements of Comprehensive Income		3
Consolidated Statements of Shareholders’ Equity		4
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures about Market Risk		17
Item 4. Controls and Procedures		17
Part II. Other Information
Item 6. Exhibits		18
Signatures		19
Exhibit 31.1 Rule 13a-14(a) Certification – CEO
Exhibit 31.2 Rule 13a-14(a) Certification – CFO
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350

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WEIS MARKETS, INC.

PART I – FINANCIAL INFORMATION

ITEM I – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(unaudited)


(amounts in thousands, except shares)	March 26, 2022		December 25, 2021
Assets
Current:
Cash and cash equivalents	$	93,092	$	86,048
Marketable securities		198,756		205,744
SERP investment		24,515		27,059
Accounts receivable, net		47,310		52,108
Inventories		285,355		269,587
Prepaid expenses and other current assets		29,613		31,112
Total current assets		678,641		671,658
Property and equipment, net		954,521		977,787
Operating lease right-to-use		193,596		191,175
Goodwill		52,330		52,330
Intangible and other assets, net		17,850		17,525
Total assets	$	1,896,938	$	1,910,475

Liabilities
Current:
Accounts payable	$	193,233	$	218,774
Accrued expenses		49,040		48,654
Operating leases		44,096		39,940
Accrued self-insurance		19,003		18,568
Deferred revenue, net		8,505		11,901
Income taxes payable		14,919		7,360
Total current liabilities		328,796		345,197
Postretirement benefit obligations		26,474		29,964
Accrued self-insurance		23,390		23,400
Operating leases		159,623		161,669
Deferred income taxes		116,643		115,087
Other		4,535		15,416
Total liabilities		659,461		690,733
Shareholders’ Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued, 26,898,443 shares outstanding		9,949		9,949
Retained earnings		1,381,745		1,358,963
Accumulated other comprehensive income (Net of deferred taxes of $1,332 in 2022 and $669 in 2021)		(3,360)		1,687
		1,388,334		1,370,599
Treasury stock at cost, 6,149,364 shares		(150,857)		(150,857)
Total shareholders’ equity		1,237,477		1,219,742
Total liabilities and shareholders’ equity	$	1,896,938	$	1,910,475

See accompanying notes to Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


		13 Weeks Ended
(amounts in thousands, except shares and per share amounts)		March 26, 2022		March 27, 2021
Net sales	$	1,104,069	$	1,006,340
Cost of sales, including advertising, warehousing and distribution expenses		810,384		738,950
Gross profit on sales		293,685		267,390
Operating, general and administrative expenses		252,271		235,556
Income from operations		41,414		31,834
Investment income (loss) and interest expense		(881)		1,611
Other income (expense)		1,505		(775)
Income before provision for income taxes		42,038		32,670
Provision for income taxes		10,649		8,415
Net income	$	31,389	$	24,255

Weighted-average shares outstanding, basic and diluted		26,898,443		26,898,443
Cash dividends per share	$	0.32	$	0.31
Basic and diluted earnings per share	$	1.17	$	0.90

See accompanying notes to Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	13 Weeks Ended
(amounts in thousands)		March 26, 2022		March 27, 2021
Net income	$	31,389	$	24,255
Other comprehensive income (loss) by component, net of tax:
Available-for-sale marketable securities
Unrealized holding gains (losses) arising during period (Net of deferred taxes of $2,001 and $306, respectively for the thirteen weeks ended)		(5,047)		(774)
Other comprehensive income gain (loss), net of tax		(5,047)		(774)
Comprehensive income, net of tax	$	26,342	$	23,481

See accompanying notes to Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


						Accumulated
(amounts in thousands, except shares)						Other						Total
For the Thirteen Weeks Ended	Common Stock			Retained		Comprehensive		Treasury Stock				Shareholders’
March 26, 2022 and March 27, 2021	Shares	Amount		Earnings		Income (Loss)		Shares		Amount		Equity
Balance at December 25, 2021	33,047,807	$	9,949	$	1,358,963	$	1,687		6,149,364	$	(150,857)	$	1,219,742
Net Income	—		—		31,389		—		—		—		31,389
Other comprehensive income (loss), net of tax	—		—		—		(5,047)		—		—		(5,047)
Dividends paid	—		—		(8,608)		—		—		—		(8,608)
Balance at March 26, 2022	33,047,807	$	9,949	$	1,381,745	$	(3,360)		6,149,364	$	(150,857)	$	1,237,477

Balance at December 26, 2020	33,047,807	$	9,949	$	1,283,737	$	3,286		6,149,364	$	(150,857)	$	1,146,115
Net income	—		—		24,255		—		—		—		24,255
Other comprehensive income (loss), net of tax	—		—		—		(774)		—		—		(774)
Dividends paid	—		—		(8,339)		—		—		—		(8,339)
Balance at March 27, 2021	33,047,807	$	9,949	$	1,299,653	$	2,512		6,149,364	$	(150,857)	$	1,161,257

See accompanying notes to Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	13 Weeks Ended
(amounts in thousands)		March 26, 2022		March 27, 2021
Cash flows from operating activities:
Net income	$	31,389	$	24,255
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		25,629		25,359
(Gain) loss on disposition of fixed assets		(3)		63
Unrealized (gain) loss in value of equity securities		214		(237)
Deferred income taxes		3,557		2,133
Unrealized (gain) loss in SERP		2,184		(448)
Changes in operating assets and liabilities:
Inventories		(15,768)		(7,709)
Accounts receivable and prepaid expenses		6,297		15,763
Accounts payable and other liabilities		(26,316)		(49,776)
Income taxes		7,559		5,146
Other		(262)		388
Net cash provided by operating activities		34,480		14,937
Cash flows from investing activities:
Purchase of property and equipment		(18,793)		(37,043)
Proceeds from the sale of property and equipment		13		29
Purchase of marketable securities		(25,965)		(10,165)
Proceeds from the sale and maturities of marketable securities		25,481		6,125
Purchase of intangible assets		(48)		(17)
Proceeds from sale of intangible assets		125		—
Change in SERP investment		359		(922)
Net cash used in investing activities		(18,828)		(41,993)
Cash flows from financing activities:
Dividends paid		(8,608)		(8,339)
Net cash used in financing activities		(8,608)		(8,339)
Net increase (decrease) in cash and cash equivalents		7,044		(35,395)
Cash and cash equivalents at beginning of year		86,048		136,612
Cash and cash equivalents at end of period	$	93,092	$	101,217

See accompanying notes to Consolidated Financial Statements. In the first thirteen weeks of 2022, there was $233 thousand cash paid for income taxes compared to $1.1 million in 2021 for the same period. Cash paid for interest related to long-term debt was $8 thousand and $9 thousand in the first thirteen weeks of 2022 and 2021, respectively.

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WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Significant Accounting Policies

Basis of Presentation: The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring deferrals and accruals) considered necessary for a fair presentation have been included. The operating results for the periods presented are not necessarily indicative of the results to be expected for the full year. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements and there were no material subsequent events which require additional disclosure. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s latest Annual Report on Form 10-K.

(2) Current Relevant Accounting Standards

The Company regularly monitors recently issued accounting standards and assesses their applicability and impact. The Company believes that there are no accounting standard updates that have or will have a material or significant impact on the Company’s accounting policies.

(3) Marketable Securities

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets. FASB has established three levels of inputs that may be used to measure fair value:

Level 1Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available. The Company’s municipal bond and commercial paper portfolio is valued using Level 2 inputs. The Company’s municipal bonds and commercial paper are valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm which includes various third-party pricing services. These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.

The Company accrues interest on its bond and commercial paper portfolio throughout the life of each bond and commercial paper held. Dividends from the equity securities are recognized as received. Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment income of $632 thousand in the thirteen weeks ended March 26, 2022, which included an unrealized loss in equity securities of $214 thousand. In the thirteen weeks ended March 27, 2021, the Company recognized investment income of $844 thousand, which included an unrealized gain in equity securities of $237 thousand.

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WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Marketable securities, as of March 26, 2022 and December 25, 2021, consisted of:


			Gross		Gross
(amounts in thousands)	Amortized		Unrealized		Unrealized		Fair
March 26, 2022	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities							$	6,295
Level 2
Corporate and municipal bonds	$	152,238	$	2,012	$	(6,648)		147,602
Commercial Paper		44,915		6		(62)		44,859
	$	197,153	$	2,018	$	(6,710)	$	198,756


			Gross		Gross
(amounts in thousands)	Amortized		Unrealized		Unrealized		Fair
December 25, 2021	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities							$	6,509
Level 2
Corporate and municipal bonds	$	151,947	$	4,753	$	(2,384)		154,315
Commercial Paper		44,931		2		(13)		44,920
	$	196,878	$	4,755	$	(2,397)	$	205,744

Maturities of marketable securities classified as available-for-sale at March 26, 2022, were as follows:


	Amortized		Fair
(amounts in thousands)	Cost		Value
Available-for-sale:
Due within one year	$	57,746	$	57,494
Due after one year through five years		89,527		87,916
Due after five years through ten years		49,880		47,051
	$	197,153	$	192,461

SERP Investments

The Company also maintains a non-qualified supplemental executive retirement plan for certain of its associates which allows them to defer income to future periods. Participants in the plans earn a return on their deferrals based on mutual fund investments. The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans. Such investments are reported on the Company’s Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income (loss) and interest expense” on the Company’s Consolidated Statements of Income. The Company recognized investment loss of $1.5 million in the thirteen weeks ended March 26, 2022, and investment income of $775 thousand in the same period in 2021. The changes in the underlying liability to the associates are recorded in “Other income (expense).”

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WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable securities. The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.


	Unrealized Gains (Losses)
	on Available-for-Sale
(amounts in thousands)	Marketable Securities
Accumulated other comprehensive income (loss) balance as of December 25, 2021	$	1,687

Other comprehensive income (loss)		(5,047)
Net current period other comprehensive income (loss)		(5,047)
Accumulated other comprehensive income (loss) balance as of March 26, 2022	$	(3,360)

(5) Long-Term Debt

On September 1, 2016, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”), which was amended on September 29, 2021, and matures on September 1, 2024. The Credit Agreement 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 26, 2022, the availability under the revolving credit agreement was $25.3 million, net of $4.7 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Interest expense related to long-term debt was $8 thousand in each of the thirteen weeks ended March 26, 2022, and March 27, 2021.

(6) Revenue Recognition

The Chief Operating Officer, the Company’s chief operating decision maker, analyzes store operational revenues by geographical area but each area offers customers similar products, has similar distribution methods, and is supported by centralized management processes. The Company’s operations are reported as a single reportable segment.

The following table represents net sales by type of product for the thirteen weeks ended March 26, 2022, and March 27, 2021:


	13 Weeks Ended
(amounts in thousands)	March 26, 2022				March 27, 2021
Grocery	$	941,596	85.3	%	$	874,073

SEC Form 10-Q filed by Weis Markets Inc.