Ingles Markets, Incorporated (IMKTA) 2016 Q2 法說會逐字稿

Good day and welcome to the Ingles Markets second-quarter 2016 earnings release conference call. Today's call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to the Chief Financial Officer Mr. Ron Freeman. Please go ahead, sir.

大家好，歡迎參加 Ingles Markets 2016 年第二季財報發布電話會議。今天的通話正在錄音。現在，我想將開幕致詞和介紹交給財務長羅恩·弗里曼先生。先生，請繼續。

Thank you and good morning. Welcome to Ingles Markets fiscal 2016 second-quarter conference call. With me today are Robert Ingles, II, Chairman of the Board; and Jim Lanning, Chief Executive Officer.

謝謝，早安。歡迎參加 Ingles Markets 2016 財政年度第二季電話會議。今天與我一起出席的有董事會主席羅伯特·英格爾斯二世 (Robert Ingles, II)；以及首席執行官 Jim Lanning。

Statements made on this call include forward-looking statements as defined by and subject to the Safe Harbor as created by federal securities laws. Words such as expects, anticipates, intend, plan, believe, and similar expressions are intended to identify forward-looking statements. Statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed on this call.

本次電話會議中發表的聲明包括聯邦證券法所定義並受安全港約束的前瞻性聲明。預期、預計、打算、計劃、相信等詞語和類似的表達旨在識別前瞻性陳述。這些聲明並不能保證未來的表現，並且涉及難以預測的風險、不確定性和假設。因此，實際結果可能與本次電話會議中所表達的內容有重大差異。

Ingles Markets does not undertake to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For a description of factors that could cause actual results to differ materially from that anticipated by forward-looking statements, you are referred to the Company's public filings, including the Form 10-K for the fiscal year ended September 26, 2015. In accordance with a long-standing Company policy and in recognition of the extremely competitive nature of our industry, this call will not address individual competitors or Ingles' marketing strategies other than what is included in the Company's filings.

Ingles Markets 不承諾公開更新任何前瞻性聲明，無論由於新資訊、未來事件或其他原因。有關可能導致實際結果與前瞻性陳述所預期的結果有重大差異的因素的描述，請參閱本公司的公開文件，包括截至2015年9月26日的財政年度的10-K表。根據公司的長期政策並考慮到我們行業極其激烈的競爭性質，本次電話會議將不會討論除公司文件中所述內容以外的個別競爭對手或英格爾斯的營銷策略。

This morning I'll provide you with a summary of our second-quarter and six-month results, followed by additional comments. Following my remarks in today's call, I will be able to answer -- be available, excuse me, to answer any questions you have about our latest quarterly results.

今天上午，我將向您提供我們第二季和六個月的業績摘要，然後提出一些補充評論。在今天的電話會議上發言之後，我將能夠回答——抱歉，我將隨時回答您有關我們最新季度業績的任何問題。

Going forward, we will issue quarterly press releases to report our results and discontinue our quarterly conference calls. However, I want to assure you that we value your interest and investment in Ingles Markets. In the future, I will, as always, be available to respond to your questions on a one-on-one basis. And I look forward to speaking with each of you next quarter after we have released our quarterly results.

展望未來，我們將發布季度新聞稿來報告我們的業績，並停止季度電話會議。但是，我想向您保證，我們重視您對 Ingles Markets 的興趣和投資。今後，我將一如既往地一對一地回答你們的問題。我期待在下個季度發布季度業績後與大家進行交談。

Our press release issued this morning is available on our website at www.ingles-markets.com. Our 10-Q for the quarter was filed a few days ago and is available on our website as well.

我們今天早上發布的新聞稿可以在我們的網站 www.ingles-markets.com 上查閱。我們本季的 10-Q 報表已於幾天前提交，也可在我們的網站上查閱。

We achieved higher sales and net income for the three months ended March 26, 2016, compared with the three months ended March 28, 2015. Net income totaled $14.4 million for the quarter ended March 26, 2016, compared with $14.3 million for the second quarter ended March 28, 2015. Net sales also increased despite significantly lower retail gasoline prices this quarter compared with the second quarter of last fiscal year.

與截至 2015 年 3 月 28 日的三個月相比，截至 2016 年 3 月 26 日的三個月我們實現了更高的銷售額和淨收入。截至 2016 年 3 月 26 日的季度，淨收入總計 1,440 萬美元，而截至 2015 年 3 月 28 日的第二季淨收入為 1,430 萬美元。儘管本季的汽油零售價格與上年財年第二季相比大幅下降，但淨銷售額仍有所成長。

For the six months ended March 26, 2016, net income totaled $27.3 million compared with $29.3 million for the six months ended March 28, 2015. The main reason for this decrease is that gasoline gross profits were significantly higher during the fiscal 2015 six-month period compared with the current-year fiscal six-month period. The three and six-month periods ended March 2016 benefited from extra Easter sales. Easter occurred in March 2016 but did not occur until the third quarter of last fiscal year.

截至 2016 年 3 月 26 日的六個月，淨收入總計 2,730 萬美元，而截至 2015 年 3 月 28 日的六個月為 2,930 萬美元。下降的主要原因是，2015財年六個月期間的汽油毛利與去年同期相比大幅增加。截至 2016 年 3 月的三個月和六個月期間受益於復活節的額外銷售。2016年復活節發生在3月，但直到上一財年的第三季才發生。

First, a description of our second-quarter results. Second-quarter fiscal 2016 sales increased 1% to $924.3 million, an increase of 9% from last year's second-quarter sales. Comparable store sales, excluding gasoline, increased 1.2%. Lower gasoline sales were offset by higher sales of other products and by the positive effect of Easter sales. Excluding Easter sales -- excluding gasoline sales and the effect of extra Easter sales, retail grocery comparable-store sales increased 1.6% over the comparative fiscal quarters.

首先，描述一下我們的第二季業績。2016財年第二季銷售額成長1%至9.243億美元，較去年第二季銷售額成長9%。不包括汽油的同店銷售額成長了 1.2%。其他產品銷售的成長以及復活節銷售的正面影響抵消了汽油銷售的下降。不包括復活節銷售額（不包括汽油銷售額和額外復活節銷售的影響），零售雜貨同店銷售額在同期增長了 1.6%。

Gross profit for the March 2016 quarter increased 4.6% to $228.7 million compared with $218.7 million for the second quarter of last fiscal year. Gross profit as a percentage of sales was 24.7% for the March 2016 quarter compared with 23.9% for the March 2015 quarter. Excluding gasoline sales, grocery segment gross profit as a percentage of sales increased 23 basis points comparing the second quarter of fiscal 2016 with the same fiscal 2015 period.

2016 年 3 月當季毛利較上年第二季的 2.187 億美元成長 4.6% 至 2.287 億美元。2016 年 3 月季度的毛利佔銷售額的百分比為 24.7%，而 2015 年 3 月季度為 23.9%。除汽油銷售外，食品雜貨部門毛利佔銷售額的百分比與 2016 財年第二季相比 2015 財年同期增加了 23 個基點。

Operating and administrative expenses for the March 2016 quarter totaled $196.2 million compared with $185.6 million for the March 2015 quarter. Interest expense totaled $11.2 million for the three-month period ended March 26, 2016 and $11.6 million for the three-month period ended March 28, 2015. Total debt at the end of March 2016 was $907.7 million compared with $928.5 million at the end of March 2015.

2016 年 3 月季度的營運和管理費用總計 1.962 億美元，而 2015 年 3 月季度的營運和管理費用為 1.856 億美元。截至 2016 年 3 月 26 日的三個月期間利息支出總計 1,120 萬美元，截至 2015 年 3 月 28 日的三個月期間利息支出總計 1,160 萬美元。2016 年 3 月底的總債務為 9.077 億美元，而 2015 年 3 月底的總債務為 9.285 億美元。

Net income totaled $14.4 million for the three-month period ended March 26, 2016 compared with $14.3 million for the three-month period ended March 28, 2015. Net income as a percentage of sales was 1.6% for both the 2016 and 2015 second quarters. Basic and diluted earnings per share for our publicly traded Class A common stock were $0.73 and $0.71, respectively, for the quarter ended March 26, 2016, compared with $0.72 and $0.71, respectively, for the quarter ended March 28, 2015.

截至 2016 年 3 月 26 日的三個月期間，淨收入總計 1,440 萬美元，而截至 2015 年 3 月 28 日的三個月期間，淨收入總計 1,430 萬美元。2016 年及 2015 年第二季的淨收入佔銷售額的百分比均為 1.6%。截至 2016 年 3 月 26 日的季度，我們公開交易的 A 類普通股的基本每股收益和稀釋每股收益分別為 0.73 美元和 0.71 美元，而截至 2015 年 3 月 28 日的季度，基本每股收益和稀釋每股收益分別為 0.72 美元和 0.71 美元。

Now we'll talk about our first-half results. First-half fiscal 2016 and 2015 sales each totaled $1.88 billion. Retail grocery comparable-store sales, excluding the effect of gasoline and extra Easter sales, increased 1.5%.

現在我們來談談我們上半年的業績。2016 財年上半年和 2015 財年的銷售額分別為 18.8 億美元。除去汽油和復活節額外銷售的影響，零售雜貨同店銷售額增加了 1.5%。

Gross profit for the six months ended March 26, 2016, increased 2.5% and totaled $454.4 million compared with $443.1 million for the first six months of last fiscal year. Gross profit as a percentage of sales was 24.2% for the March 2015 six-month period compared with 23.6% for the March 2014 six-month period.

截至 2016 年 3 月 26 日的六個月的毛利成長 2.5%，總計 4.544 億美元，而去年同期為 4.431 億美元。2015 年 3 月六個月期間的毛利佔銷售額的百分比為 24.2%，而 2014 年 3 月六個月期間的毛利佔銷售額的百分比為 23.6%。

Excluding gasoline sales, retail grocery gross profit as a percentage of sales increased 8 basis points comparing the first half of fiscal 2016 compared with the same fiscal 2015 period. Gasoline gross profit dollars were lower for the six months ended March 26, 2016, compared with the six months ended March 28, 2015.

除汽油銷售額外，2016 財年上半年雜貨零售毛利佔銷售額的百分比與 2015 財年同期相比增加了 8 個基點。截至 2016 年 3 月 26 日的六個月的汽油毛利與截至 2015 年 3 月 28 日的六個月相比有所下降。

Operating and administrative expenses totaled $390.2 million for the six months ended March 26, 2016, and $372.6 million for the six months ended March 28, 2015. Interest expense decreased 1.7% to $23.2 million for the March 2016 six-month period compared with $23.6 million for the March 2015 six-month period.

截至 2016 年 3 月 26 日的六個月，營運和管理費用總計 3.902 億美元，截至 2015 年 3 月 28 日的六個月，營運和管理費用總計 3.726 億美元。2016 年 3 月的六個月期間的利息支出為 2,320 萬美元，而 2015 年 3 月的六個月期間的利息支出為 2,360 萬美元，下降 1.7%。

Net income totaled $27.3 million for the six month period ended March 26, 2016, compared with $29.3 million for the six-month period March 28, 2015. Net income as a percentage of sales was 1.5% for the six months ended March 2016 compared with 1.6% for the six months ended March 2015. Basic and diluted earnings per share for publicly traded Class A common stock were $1.39 and $1.35, respectively, for the six months ended March 26, 2016, compared with $1.49 and $1.45, respectively, for the six months ended March 28, 2015.

截至 2016 年 3 月 26 日的六個月期間的淨收入總計 2,730 萬美元，而截至 2015 年 3 月 28 日的六個月期間的淨收入總計 2,930 萬美元。截至 2016 年 3 月的六個月，淨收入佔銷售額的百分比為 1.5%，而截至 2015 年 3 月的六個月為 1.6%。截至 2016 年 3 月 26 日的六個月，公開交易的 A 類普通股每股基本收益和稀釋收益分別為 1.39 美元和 1.35 美元，而截至 2015 年 3 月 28 日的六個月，每股基本收益和稀釋分別為 1.49 美元和 1.45 美元。

Capital expenditures for the March 2016 six-month period totaled $71.2 million compared with $44.3 million for the March 2015 six-month period. The increased capital expenditures this year are focused on stores scheduled to open later this year as well as ongoing improvements to the existing store base. Capital expenditures for the entire fiscal year are expected to be approximately $125 million to $145 million.

2016 年 3 月止六個月的資本支出總計 7,120 萬美元，而 2015 年 3 月止六個月的資本支出總計 4,430 萬美元。今年增加的資本支出主要集中在計劃於今年稍後開設的商店以及對現有商店基礎的持續改善。整個財年的資本支出預計約為1.25億至1.45億美元。

The Company currently has lines of credit totaling $175 million, of which $135.9 million is currently available. The Company believes its financial resources, including these lines of credit and other internal and anticipated external sources of funds, will be sufficient to meet planned capital expenditures, debt service, and working capital requirements for the foreseeable future.

該公司目前的信用額度總額為 1.75 億美元，其中目前可用額度為 1.359 億美元。公司相信，其財務資源，包括這些信用額度和其他內部和預期的外部資金來源，將足以滿足可預見的未來的計劃資本支出、債務償還和營運資金需求。

To summarize, we are pleased with our sales growth and remain committed to improving our store base and increasing customer satisfaction. We will continue our efforts to keep the momentum going for the remainder of this year.

總而言之，我們對銷售成長感到滿意，並將繼續致力於改善我們的門市基礎並提高客戶滿意度。我們將繼續努力，保持今年剩餘時間的良好勢頭。

We will now take your questions.

我們現在將回答大家的提問。

(Operator Instructions) Bryan Hunt, Wells Fargo.

（操作員指示）布萊恩·亨特，富國銀行。

Good morning, it's actually Dave Cook on for Bryan. I wanted to first touch on inflation and deflation. Can you talk about the -- what you saw in the quarter, as well as your outlook for the rest of the year?

早上好，實際上是戴夫庫克 (Dave Cook) 代替布萊恩 (Bryan)。我想先談談通貨膨脹和通貨緊縮。您能談談本季的情況以及對今年剩餘時間的展望嗎？

Well, there's a little bit of an uptick in inflation, but it tends to vary from department to department. Milk prices are actually down, seeing a little bit of the relief in produce; and a lot of other things are holding steady. So it is not the same behavior across the board.

嗯，通貨膨脹確實有所上升，但各部門的情況有所不同。由於農產品價格略有回落，牛奶價格實際上有所下降；許多其他事情也保持穩定。因此，這並不是全面相同的行為。

Okay, how about promotional intensity, same sort of thing -- what you saw in the quarter as well as your outlook for the year?

好的，促銷強度如何，同樣的事情——您在本季度看到了什麼以及對今年的展望如何？

I'm not sure I understand what you mean by promotional activity.

我不確定我是否理解您所說的促銷活動是什麼意思。

I guess what you're seeing from your competitors.

我猜你從你的競爭對手身上看到了什麼。

Yes, well, again, we don't speak to the activities of our competitors. We have our own marketing programs that focus on what we try to do well.

是的，我們再說一遍，我們不談論競爭對手的活動。我們有自己的行銷計劃，專注於我們努力做好的事情。

Okay, click-and-collect seems to be a big story in the industry these days. Can you talk about -- are you guys exploring that option? Do you think it makes sense for your customer base? How are you thinking about that?

好的，如今，「點擊並收集」似乎是業內的一個大話題。你能談談嗎——你們正在探索這個選擇嗎？您認為這對您的客戶群有意義嗎？您對此有何看法？

We are exploring a number of different options on how are customers can pay us and how they can access products they want in our stores. We do not have anything, any announcement that we are ready to make on which direction we are taking there right now. But certainly it's something to be considered, and we're well into doing that.

我們正在探索多種不同的選擇，例如顧客如何向我們付款以及如何在我們的商店中找到他們想要的產品。我們目前還未準備好宣布任何關於我們採取什麼方向的消息。但這確實是需要考慮的事情，而且我們正在積極地做這件事。

Okay. Your fluid dairy processing business -- do you continue to believe that that's a strategic asset for you all?

好的。您的液態乳製品加工業務—您是否仍然相信這對您所有人來說都是一項戰略資產？

Absolutely. It provides our stores with a steady source of milk. It provides, actually, two-thirds of its business to folks who aren't our stores. So it's a good diversity of revenue stream for us, and that business performs very well.

絕對地。它為我們的商店提供了穩定的牛奶來源。實際上，它三分之二的業務是面向我們商店以外的客戶。所以這對我們來說是一個很好的收入來源多元化，而且這項業務表現非常好。

Okay. And then the last one from us: any thoughts on Lidl and Wegman's entering the North Carolina market? Do you view that as a sizable threat?

好的。我們最後一個問題是：您對 Lidl 和 Wegman 進入北卡羅來納州市場有何看法？您認為這是一個相當大的威脅嗎？

We view that as talking about our competitors, which we prefer not to do.

我們認為這是在談論我們的競爭對手，但我們不願意這樣做。

All right. That's all for me, thanks.

好的。對我來說就這樣吧，謝謝。

Okay, thank you.

好的，謝謝。

(Operator Instructions) Damian Witkowski, Gabelli & Co.

（操作說明）Damian Witkowski，Gabelli & Co.

You said you're expecting to open stores later this year. How many would you expect to open by the end of this fiscal year?

您說過預計今年稍後開設商店。您預計本財政年度結束時將開設多少家店？

Two or three. We've got those in process right now and a couple of other ones pretty close. So again, it's an accelerated pace of new buildings over what we've done in the last couple of years.

兩三個。我們現在正在處理這些項目，另外幾個也已經接近尾聲。所以，與過去幾年相比，新建築的建設速度加快。

Yes, no, it is. And these are new locations? They are not replacing -- they are not replacement stores?

是的，不是。這些都是新地點嗎？它們不是替代商店——它們不是替代商店嗎？

No, they actually are replacement buildings in this case.

不，在這種情況下，它們實際上是替代建築物。

Okay. So the net store number will stay the same, or --?

好的。那麼淨商店數量將保持不變，還是——？

That's correct.

沒錯。

Okay.

好的。

Square footage will grow, but the net number will stay the same.

建築面積將會增加，但淨數量將維持不變。

Sure, sure. How much bigger are these, by the way, on average versus --?

當然，當然。順便問一下，這些平均比--大多少？

It's easily in the tens of thousands of square feet.

其面積很容易就達到數萬平方英尺。

Per store?

每家商店？

Per store, yes.

是的，每個商店都有。

Okay. And then you said your fuel margins were down significantly year-over-year. If I look at the industry, the industry is actually up slightly on average, I think. So is there anything in particular going on? Are you doing more promotions to drive traffic to your stores, or -- any light you can shed on that would be great.

好的。然後你們說你們的燃料利潤率較去年同期大幅下降。如果我看一下這個行業，我認為該行業的平均水平實際上略有上升。那麼有什麼特別的事情發生了嗎？您是否正在進行更多促銷活動來增加商店客流量，或者—您能對此提供任何說明嗎？

Well, Damian, what period are you talking about?

那麼，達米安，你談論的是哪個時期？

Well, you know, the first quarter, same -- if I look at some of the first-quarter results for pure-plays in the convenience store space, their fuel margins are actually up slightly. Not a lot but they are up year-over-year.

嗯，你知道，第一季也是一樣——如果我看一下便利商店領域的一些純企業第一季的業績，他們的燃料利潤率實際上略有上升。雖然數量不多，但年比還是有增加。

You've got to remember, we're talking about our six-month results here. And our December quarter, which was our first one -- I think industrywide the December 2014 quarter was much better than the December 2015 quarter.

你必須記住，我們這裡討論的是六個月的表現。這是我們的第一個 12 月季度——我認為整個行業 2014 年 12 月季度比 2015 年 12 月季度要好得多。

Okay. So that means that your first quarter -- no, your fiscal second quarter, but the December to March calendar quarter was --

好的。所以這意味著你的第一季——不，你的財政第二季度，但 12 月至 3 月的日曆季度是——

Correct.

正確的。

-- down significantly.

——大幅下降。

No, no, no, no, other way around. The March quarters themselves are pretty close to each other. It was the December 2015 quarter versus the December 2014 quarter.

不，不，不，不，恰恰相反。三月季度本身彼此非常接近。這是 2015 年 12 月季度與 2014 年 12 月季度的比較。

Okay, so I misheard that, then.

好吧，那我聽錯了。

That's all right.

沒關係。

And on the operating expense side, I mean, it continues to grow year-over-year. It looks like the majority of it again is labor. I think last time we spoke about it, it was really driven by the fact that you're increasing labor and services areas, you know, in fresh offerings just to drive those sales and such. Is that what's continuing to drive those increases? Or is there something else?

在營業費用方面，我的意思是，它繼續逐年增長。看起來大部分又是勞動力。我認為上次我們談論這個問題時，它的真正驅動力是你增加了勞動力和服務領域，你知道，提供新鮮的產品只是為了推動銷售等等。這是推動這些數字持續成長的因素嗎？或是有其他原因嗎？

Well, there's certainly that. And also in our region, we're just starting to feel some overall tighter labor markets, and we're having to respond to that.

嗯，確實有這樣的情況。在我們地區，我們剛開始感受到整體勞動市場趨緊，我們必須對此做出反應。

Okay. And then lastly, Ron, just on the whole EMV thing, the credit card thing, with the chip and everything else that kind of shifts liability now from the issuer of the credit card to the retailer, if they don't have the chip installed: are you actually compliant with that? And if not, are you planning to be? And in the meantime, has that affected your gross margins, because your chargebacks have gone up?

好的。最後，Ron，關於整個 EMV 事情，信用卡的事情，有了晶片和其他一切，責任現在就從信用卡發行人轉移到零售商，如果他們沒有安裝晶片：你真的遵守了嗎？如果沒有，您有這個打算嗎？同時，由於您的退款金額增加，這是否影響了您的毛利率？

Well, we are compliant with it, and we have not noticed any detectable influence on our gross margin.

嗯，我們遵守了這項規定，而且我們沒有發現它對我們的毛利率有任何可察覺的影響。

Okay, all right. Thanks, Ron. I'll miss these conference calls.

好的，好的。謝謝，羅恩。我會懷念這些電話會議。

Well, I'm sure we'll speak on the phone a lot, Damian.

嗯，我相信我們會經常通電話，達米安。

Thanks, Ron.

謝謝，羅恩。

Sure.

當然。

(Operator Instructions) It appears there are no further telephone questions.

（操作員指示）似乎沒有其他電話問題。

Okay, well thank you for joining us today, everyone. And again, be on the lookout for our press release in early August to report our June results. Everyone have a really nice day.

好的，非常感謝大家今天的參與。再次強調，請關注我們將於 8 月初發布的新聞稿，其中將報告我們 6 月的業績。祝大家有個愉快的一天。

And once again, that does conclude today's conference. We thank you all for your participation.

今天的會議又結束了。我們感謝大家的參與。