IMKTA 10-K & 10-Q changes, risk factors and insider trading

The Company’s business is dependent on information technology systems. These complex systems are an important part of ongoing operations. If the Company were to experience disruption in these systems, did not maintain existing systems properly, or did not implement new systems appropriately, operations could suffer. The Company is currently undergoing a systematic program to enhance its information technology abilities.

The Company operates fuel stations at 108106 of its store locations.locations, which excludes two fuel locations temporarily closed due to Hurricane Helene. While the Company obtains gasoline and diesel fuel from several different suppliers, long-term disruption in the availability and wholesale price of fuel for resale could have a material adverse effect on the Company’s business, financial condition and/or results of operations.

Ingles is a leading supermarket chain in the Southeast United States and operates a total of 198194 supermarkets in North Carolina (7572), Georgia (6564), South Carolina (35), Tennessee (21), Virginia (1) and Alabama (1)., excluding three stores that remain temporarily closed due to damage sustained during Hurricane Helene. Ingles supermarkets offer customers a wide variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables and non-food products. Non-food products include fuel centers, pharmacies, health/beauty/cosmetic products and general merchandise. The Company offers quality private label items in most of its departments. In addition, the Company focuses on selling products to its customers through the development of certified organic products, bakery departments and prepared foods including delicatessen sections. As of September 28,27, 2024,2025, the Company operated 115112 in-store pharmacies and 108106 fuel stations. Ingles also operates a fluid dairy and earns shopping center rentals.

The Company accounts for the impairment of long-lived assets in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 360. Asset groups are primarily comprised of our individual store and shopping center properties. For assets to be held and used, the Company tests for impairment using undiscounted cash flows and calculates the amount of impairment using discounted cash flows. For assets held for sale, impairment is recognized based on the excess of remaining book value over expected recovery value. The recovery value is the fair value as determined by independent quotes or expected sales prices developed by internal associates, net of costs to sell. Estimates of future cash flows and expected sales prices are judgments based upon the Company’s experience and knowledge of local operations and cash flows that are projected for several years into the future. These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred.occurred Forand thedetermined yearthat endedno impairments existed as of September 28,27, 2024, the Company recognized a property and equipment impairment loss of $4.5 million pertaining to Hurricane Helene.2025.

Comparable store sales are defined as sales by grocery stores in operation for five full fiscal quarters. The Company has an ongoing renovation and expansion plan to modernize the appearance and layout of its existing stores. Sales from replacement stores, major remodels and the addition of fuel stations to existing stores are included in the comparable store sales calculation from the date of completion of the replacement, remodel or addition. A replacement store is a newly opened store that replaces an existing nearby store that is closed. A major remodel entails substantial remodeling of an existing store and may include additional retail square footage. Comparable store sales for the fiscal years ended September 28, 2024 and September 30, 2023 included 198 stores. Since the impacts of Hurricane Helene occurred during the last two days of the fiscal year ended September 28, 2024, comparable store sales included all 198 stores.

Net Sales. Net sales for the fiscal year ended September 28,27, 20242025, totaled $5.64$5.33 billion, compared with $5.89$5.64 billion for the fiscal year ended September 30,28, 2023.2024. InExcluding additionfuel tosales, total grocery comparable store sales decreased 1.7% over the storescomparative closedtwelve-month due to damage and power outages caused by Hurricane Helene, the Company’s headquarters lost connectivity to the internet which disrupted the Company’s ability to accept credit and debit cards.period. As described above under “Comparable Store Sales”, the Company estimates that it lost approximately $14.0 million in sales for the last two days of the fiscal year ended September 28, 2024 due to the disruptions caused by Hurricane Helene. Store closures and power outages as a result of Hurricane Helene will have an impact on net sales for the first quarter and full fiscal year of 2025. In addition, the lack of water and subsequent ban on water usage, will have an impact on the fluid dairy operations for the first quarter of fiscal year 2025.

Management analyzes comparable stores sales for the 52 weeks of fiscal year 20242025 with the corresponding 52 calendar weeks of the 53 week fiscal year 2023.2024. On this basis, retail grocery comparable store sales excluding fuel decreased 1.7% for fiscal year 20242025 compared to fiscal year 2023.2024. The number of transactions (excluding fuel) decreased 0.3%4.2% while the average transaction size (excluding fuel) decreasedincreased by 1.4%.0.1%. Comparing fiscal year 20242025 with 2023,2024, fuel gallons sold decreased 5.5%5.4% and per gallon fuel prices decreased 3.3%.9.4%.

Gross Profit. Gross profit for the fiscal year ended September 28,27, 20242025 decreased $105.1$25.7 million, or 7.5%,2.0%, to $1.3$1.27 billion compared with $1.4$1.30 billion for the fiscal year ended September 30,28, 2023.2024. As a percentage of sales, gross profit totaled 23.9% for the fiscal year ended September 27, 2025 as compared to 23.0% for the fiscal year ended September 28, 2024 as compared to 23.8% for the fiscal year ended September 30, 2023.2024. The decrease in gross profit resulted primarily from the $30.4lost millionrevenue infrom inventorythe losstemporarily closed stores and the electronic payment disruptions due to Hurricane Helene.Helene partially offset by insurance proceeds of $4.7 million. Retail grocery gross profit as a percentage of total sales (excluding fuel) increased 0.8 basis points in fiscal year 2025, compared with fiscal year 2024.

Operating and Administrative Expenses. Operating and administrative expenses increaseddecreased $46.4$2.9 million, or 4.2%,0.3%, to $1.2$1.159 billion for the fiscal year ended September 27, 2025 from $1.162 billion for the fiscal year ended September 28, 2024 from $1.1 billion for the fiscal year ended September 30, 2023.2024. As a percentage of sales, operating and administrative expenses were 20.6%21.7% and 18.9%20.6% for fiscal years 20242025 and 2023,2024, respectively. Excluding fuel, which does not have significant direct operating expenses, the ratio of operating expenses to sales was 24.4% for fiscal year 2025 compared with 23.4% for fiscal year 20242024. comparedThe withcosts 21.7%of forclean up and repairs incurred in fiscal year 2023.2025 as a result of Hurricane Helene were $9.0 million, which were partially offset by insurance proceeds of $1.5 million. Included in the operating expenses isfor fiscal year 2024 was the asset impairment write off of $4.5 million,million due to Hurricane Helene. The costs of clean up and repairs will impact operating and administrative expenses for the first quarter and full fiscal year of 2025.

A breakdown of the primary increaseschanges in operating and administrative expenses is as follows.

MiscellaneousRepairs and maintenance expense increased dueas toa result of the assetcleanup impairmentand lossrepair ofcosts $4.5 millionincurred as a result of Hurricane Helene.

Gain from Sale or Disposal of Assets. Gains on sale or disposal of assets totaled $2.4 million for fiscal year 2025 and $9.1 million for fiscal year 2024 and $2.8 million for fiscal year 2023.2024. The increasedecrease was primarily related to the swap of shopping center properties that occurred in January 2024.

Other Income, Net. Other income, net totaled $14.2$12.1 million and $8.3$14.2 million for the fiscal years ended September 28,27, 20242025 and September 30,28, 2023,2024, respectively. Other income consistsconsisted primarily of interest earned, which increaseddecreased for the 20242025 fiscal year due to a combination of higherlower deposits in interest bearing accounts and higherlower rates of interest earned on the Company’s cash balances.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Ingles Annual Report on Form 10-K for the year ended September 30,28, 2023,2024, filed with the SEC on NovemberDecember 29,27, 2023,2024, for a discussion of the year ended September 30,28, 20232024 as compared to September 24,30, 2022.2023.

Capital expenditures totaled $210.9$114.5 million and $173.6$210.9 million for fiscal years 20242025 and 2023,2024, respectively, with the increasedecrease driven primarily by themore purchasepurchases of new sites and land parcels.parcels Majorduring capitalfiscal year 2024 as compared to fiscal year 2025. Capital expenditures included predominately the following:purchase of store sites and land parcels totaling 9 and 16, respectively, for fiscal years 2025 and 2024.

Ingles’ capital expenditure plans for fiscal year 20252026 include investments of approximately $120 to $160$140 million. The Company currently plans to dedicate the majority of its fiscal 20252026 capital expenditures to continued improvement of its store base, including the reopening of its temporarily closed stores, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment and improvements to the Company’s milk processing plant.

The Company generated $262.5$154.1 million of cash from operations infor fiscal 20242025 compared with $266.4$262.5 million for fiscal year 2023.2024. The decrease was primarily due to the decrease in net income, increased receivables for electronic payments and the replenishment of inventory following Hurricane Helene.

Cash used by investing activities for fiscal year 20242025 totaled $206.2$109.9 million compared with $170.1$206.2 million for fiscal year 2023.2024. The increasedecrease in cash used in investing activities was primarily due to capital expenditures, which increaseddecreased by $37.3$96.4 million in fiscal year 20242025 as compared to fiscal year 2023.2024.

The Company has a $150.0 million unsecured senior line of credit (the “Line”) thatthat, as amended in June 2025, matures in June 2026.2030. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which noneone werein the amount of $500,000 was issued at September 28,27, 2024.2025. The Company is not required to maintain compensating balances in connection with the Line. At September 28,27, 2024,2025, the Company had no other borrowings outstanding under the Line.

The Bonds and the Line contain provisions that under certain circumstances would permit the acceleration of the indebtedness under such instruments or would otherwise permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Bonds and the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. As of September 28,27, 2024,2025, the Company was in compliance with these covenants. Under the most restrictive of these covenants, the Company would have been permitted to incur approximately $945.5 million of additional borrowings (including borrowings under the Line) as of September 28, 2024.

The impactImpacts of Hurricane Helene due, including the costs to physical damage to stores, water outagerepair and banreopen andour connectivitytemporarily issues,closed stores, will impact the 2025 first quarter and fiscal year 20252026 results.

Ingles, a leading supermarket chain in the Southeast, operates 194195 supermarkets in North Carolina (7273), Georgia (64), South Carolina (35), Tennessee (21), Virginia (1) and Alabama (1), excluding three stores that remain temporarily closed due to damage sustained duringin Hurricane Helene. The Company opened one new store in North Carolina during the quarter ended June 27, 2026.

On September 27, 2024, Hurricane Helene severely impacted western North Carolina, including the area where the Company’s headquarters are located, resulting in catastrophic flooding and destruction, power and communication outages, water outages, major road closures, and loss of life. For the year ended September 28, 2024, the Company recognized an impairment loss of $30.4 million related to inventory damaged or destroyed by Hurricane Helene, for which insurance proceeds of $5.8 million and $4.7 million were received during fiscal year 2025.2026 and 2025, respectively. Additionally, the Company recognized a property and equipment impairment loss of $4.5 million for the year ended September 28, 20242024, pertaining to the same storm, for which insurance proceeds of $1.5 million were received during fiscal year 2025.

The Company is self-insured for workers’ compensation, general liability and group medical and dental benefits. Risks and uncertainties are associated with self-insurance; however, the Company has limited its exposure by maintaining excess liability coverage of $1.0 million per occurrence for workers’ compensation and for general liability, and $650,000 per covered person for medical care benefits for a policy year. Self-insurance liabilities are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on data provided by the respective claims administrators which is then applied to appropriate actuarial methods. These estimates can fluctuate if historical trends are not predictive of the future. The majority of the Company’s properties are self-insured for casualty losses and business interruption; however, the Company maintains liability coverage. At MarchJune 28,27, 2026, the Company’s self-insurance reserves totaled $36.0 million. This amount included $3.2$3.3 million of expected self-insurance recoveries from excess cost insurance or other sources that are recorded as a receivable.

The Company accounts for the impairment of long-lived assets in accordance with FASB ASC Topic 360. Asset groups are primarily composed of our individual stores and shopping center properties. For assets to be held and used, the Company tests for impairment using undiscounted cash flows and calculates the amount of impairment using discounted cash flows. For assets held for sale, impairment is recognized based on the excess of remaining book value over expected recovery value. The recovery value is the fair value as determined by independent quotes or expected sales prices developed by internal associates, net of costs to sell. Estimates of future cash flows and expected sales prices are judgments based upon the Company’s experience and knowledge of local operations and cash flows that are projected for several years into the future. These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred. There were no asset impairments during the six-monthnine-month period ended MarchJune 28,27, 2026.

The Company receives funds for a variety of merchandising activities from the many vendors whose products the Company buys for resale in its stores. These incentives and allowances are primarily composed of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts. The purpose of these incentives and allowances is generally to help defray the costs incurred by the Company for stocking, advertising, promoting and selling the applicable vendor’s products. These allowances generally relate to short term arrangements with vendors, often relating to a period of one month or less, and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Whenever practical, vendor discounts and allowances that relate to buying and merchandising activities are recorded as a component of item cost in inventory and recognized in merchandise costs when the item is sold. Due to the use of the retail method of store inventory and the nature of certain allowances, it is sometimes not practicable to apply allowances to the item cost of inventory. In those instances, the allowances are applied as a reduction of merchandise costs using a rational and systematic methodology, which results in the recognition of these incentives when the inventory related to the vendor consideration received is sold. Vendor allowances applied as a reduction of merchandise costs totaled $38.2$41.7 million and $36.4$42.0 million for the fiscal quarters ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively. For the six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, vendor allowances applied as a reduction of merchandise costs totaled $76.6$118.3 million and $71.5$113.5 million, respectively. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendor’s specific products are recorded as a reduction to the related expense in the period in which the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $2.4$2.2 million for both fiscal quarters ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025. For the six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, vendor advertising allowances recorded as a reduction of advertising expense totaled $4.8$7.0 million and $3.7$5.9 million, respectively.

Ingles operates on a 52 or 53-week fiscal year ending on the last Saturday in September. The Condensed Consolidated Statements of Income for the threethree- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 botheach include 13 and 2639 weeks of operations, respectively. Comparable store sales are defined as sales by retail stores in operation for five full fiscal quarters. Sales from replacement stores, major remodels and the addition of fuel stations to existing stores are included in the comparable store sales calculation from the date thereof. A replacement store is a newly-opened store that replaces an existing nearby store that has closed. A major remodel entails substantial remodeling of an existing store and includes additional retail square footage. For the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, comparable store sales included 194 stores, which excludes the three stores that remained closed due to the impact of Hurricane Helene.

Three Months Ended MarchJune 28,27, 2026 Compared to the Three Months Ended MarchJune 29,28, 2025

Net income for the secondthird quarter of fiscal 2026 totaled $24.3$25.9 million, compared with net income of $15.1$26.2 million for the secondthird quarter of fiscal 2025. This increase related to decreased cost of goods sold and increased vendor income offset by increased expenses, as described below.

Net Sales. Net sales decreasedincreased by $23.4$22.1 million, or 1.8%,1.6%, to $1.31$1.37 billion for the three months ended MarchJune 28,27, 2026 compared towith $1.33$1.35 billion for the three months ended MarchJune 29,28, 2025. The Medicare maximum fair price (MFP) change that became effective on January 1, 2026 reduced drug prices for 10 drugs. The impact of the MFP change resulted in a decrease in sales. Excluding fuel sales, total grocery comparable store sales decreased 1.6%3.1% over the comparative fiscal quarter. Ingles operated 195 stores at June 27, 2026, which included one new store that opened on June 17, 2026 and 194 stores at MarchJune 28, 20262025, andin Marcheach 29, 2025,case excluding three stores damaged by Hurricane Helene that remained closed at Marchboth 28,June 27, 2026 and MarchJune 29,28, 2025.

Changes in retail grocery sales for the quarter ended MarchJune 28,27, 2026 are summarized as follows (in thousands):

Gross Profit. Gross profit for the three-month period ended MarchJune 28,27, 2026 totaled $325.3$332.4 million, an increase of $14.3$5.1 million, or 4.6%,1.6%, compared with gross profit of $311.0$327.3 million for the three-month period ended MarchJune 29,28, 2025. Gross profit as a percentage of sales was 24.9% and 23.4%24.3% for both the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025,2025. respectively.Gross profit for the three-months ended June 27, 2026 included insurance proceeds of $5.8 million for inventory loss claims related to the impact of Hurricane Helene.

Operating and Administrative Expenses. Operating and administrative expenses increased by $2.0$7.9 million, or 0.7%,2.7%, to $291.2$298.0 million for the three months ended MarchJune 28,27, 2026, from $289.1$290.1 million for the three months ended MarchJune 29,28, 2025. As a percentage of sales, operating and administrative expenses were 22.3%21.8% and 21.8%21.5% for the MarchJune 2026 and MarchJune 2025 quarters, respectively.

Salaries and wages increased due to overall increased cost to attract and retain associates in the Company’s market area.area, which has experienced significant wage inflation over the last several years.

Insurance expense decreased due to lower claim volume for our self-insured employee benefit plans Miscellaneous expense increased as compared to prior year expensesexpenses, thatwhich werehad been offset by $0.5 million of insurance proceeds and $0.7 million for straight line rent credits from the purchase of a ground lease.

Loss or Gain from Sale or Disposal of Assets. Gain from the sale or disposal of assets totaled $0.4$44.1 millionthousand for the three months ended MarchJune 27, 2026. During the quarter ended June 28, 2026.2025, Lossthe gain from the sale or disposal of assets totaledwas $0.2$143.2 million for the three months ended March 29, 2025.thousand.

Interest Expense. Interest expense totaled $4.5 million for the threethree-month monthsperiod ended MarchJune 28,27, 2026 compared withand $4.9 million for the threethree-month monthsperiod ended MarchJune 29,28, 2025. The decrease related primarily to lower interest rates applicable to our variable rate indebtedness. Total debt at March 28,June 2026 was $503.8$500.5 million compared with $521.6$518.0 million at March 29,June 2025.

Income Taxes. Income tax expense totaled $8.5$7.1 million for the three months ended MarchJune 28,27, 2026,2026 reflectingand an effective tax rate of 25.9% of pretax income. Income tax expense totaled $4.5$9.1 million for the three months ended MarchJune 29,28, 2025, reflecting an effective tax raterates of 22.9%21.6% ofand pretax25.7%, income.respectively. During the three months ended June 28, 2025 the Company’s annual estimated pre-tax book income was upwardly adjusted, which increased the related federal and state income tax expense for the quarter.

Net Income. Net income totaled $24.3$25.9 million for the threethree-month monthsperiod ended MarchJune 28,27, 2026 compared with $15.1$26.2 million for the threethree-month monthsperiod ended MarchJune 29,28, 2025. Basic and diluted earnings per share for Class A Common Stock were $1.31$1.39 and $1.28,$1.36, respectively, for the MarchJune 2026 quarter, compared to $0.81$1.41 and $0.80,$1.38, respectively, for the MarchJune 2025 quarter. Basic and diluted earnings per share for Class B Common Stock were each $1.19$1.27 for the MarchJune 2026 quarter compared with $0.74$1.28 for the MarchJune 2025 quarter.

SixNine Months Ended MarchJune 28,27, 2026 Compared to the SixNine Months Ended MarchJune 29,28, 2025

Net income for the firstnine halfmonths ofended fiscalJune 27, 2026 totaled $52.4$78.3 million, compared with net income of $31.7$57.9 million for the firstnine halfmonths ofended fiscalJune 28, 2025. The increase related primarily to increased sales offset by increased expenses, as described below.

Net Sales. Net sales increased by $61.5$83.6 million, or 2.4%,2.1%, to $2.68$4.05 billion for the sixnine months ended MarchJune 28,27, 2026 compared with $2.62$3.97 billion for the sixnine months ended MarchJune 29,28, 2025. ForHurricane Helene severely impacted western North Carolina at the sixend monthsof endedSeptember March2024, 29, 2025,and the Company estimatedestimates that approximately $55 to $65 million of revenue was lost during the three-week period immediately following Hurricanethe Helenestorm due to road and power outagesoutages, which prevented some stores from opening or maintaining normal store hours, as well as due to electronic payment disruptions as a result of theHurricane storm.Helene. Excluding fuel sales, total grocery comparable store sales decreasedincreased 2.2%0.4% forover the sixcomparative monthsnine-month ended March 28, 2026 as compared to the same period in 2025.period.

Changes in retail grocery sales for the quarternine months ended MarchJune 28,27, 2026 are summarized as follows (in thousands):

Gross Profit. Gross profit for the sixnine-month monthsperiod ended MarchJune 28,27, 2026 totaled $659.8$992.3 million, an increase of $47.7$52.8 million, or 7.8%,5.6%, compared with gross profit of $612.1$939.4 million for the sixnine-month monthsperiod ended MarchJune 29,28, 2025. Gross profit as a percentage of sales was 24.6%24.5% and 23.4%23.7% for the sixnine months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively. Gross profit for the nine-months ended June 27, 2026 included insurance proceeds of $5.8 million for inventory loss claims related to the impact of Hurricane Helene.

Operating and Administrative Expenses. Operating and administrative expenses increased by $16.7$24.6 million, or 2.9%, to $586.6$884.6 million for the sixnine months ended MarchJune 28,27, 2026, from $569.9$860.0 million for the sixnine months ended MarchJune 29,28, 2025. As a percentage of sales, operating and administrative expenses were 21.9% and 21.8%21.7% for the MarchJune 2026 and MarchJune 2025 six-monthnine-month periods, respectively.

Salaries and wages normalized as compared to the prior year period, which saw decreases in salaries and wages due to storm-related disruptions, power losses and difficulties for associates to get to work due to the damagesdamage caused by Hurricane Helene.

Miscellaneous expenses included costs associated with closed projects and additional fees associated with the Company’s annual shareholder meeting. Prior year expenses were offset by $1.5 million of insurance proceeds from property loss due to Hurricane Helene and $0.7 million for straight line rent credits from the purchase of a ground lease.

GainInterest fromExpense. SaleInterest or Disposal of Assets. Gain from the sale or disposal of assetsexpense totaled $0.4$13.6 million for the sixnine-month monthsperiod ended MarchJune 28,27, 2026, as2026 compared towith $3.0$14.7 million for the sixnine-month monthsperiod ended MarchJune 29,28, 2025.

Income Taxes. Income tax expense totaled $17.8$24.9 million for the sixnine months ended MarchJune 28,27, 2026, reflectingand an effective tax rate of 25.3% of pretax income. Income tax expense totaled $9.8$18.8 million for the sixnine months ended MarchJune 29,28, 2025, reflecting an effective tax raterates of 23.6%24.1% ofand pretax24.5%, income.respectively.

Net Income. Net income totaled $52.4$78.3 million for the sixnine-month monthsperiod ended MarchJune 28,27, 2026 compared with $31.7$57.9 million for the sixnine-month monthsperiod ended MarchJune 29,28, 2025. Basic and diluted earnings per share for Class A Common Stock were $2.82$4.21 and $2.76,$4.12, respectively, for the sixnine months ended MarchJune 28,27, 2026, compared to $1.70$3.11 and $1.67,$3.05, respectively, for the sixnine months ended MarchJune 29,28, 2025. Basic and diluted earnings per share for Class B Common Stock were each $2.56$3.83 for the sixnine months ended MarchJune 28,27, 2026 compared with $1.55$2.83 for the sixnine months ended MarchJune 29,28, 2025.

Capital expenditures totaled $53.0$76.4 million for the sixnine-month monthsperiod ended MarchJune 28,27, 2026. The Company’s capital expenditures included the continued construction of a new storestore, expectedwhich opened in June 2026, restoration repairs to openreopen inone fiscalstore, 2026,and restoration work on the three remaining stores that remain temporarily closed stores due to Hurricane Helene, the expansion and remodeling of existing stores, the acquisition of sites, new technology, and upgrades of the Company’s transportation fleet and facilities.

The Company’s capital expenditure plans for fiscal 2026 currently include investments of approximately $120 to $140$130 million. The Company currently plans to dedicate the majorityremainder of its fiscal 2026 capital expenditures to continued improvement of its store base, including the re-openingreopening of the three stores temporarily closed due to Hurricane Helene, remodeling and continued investment in one store expected to open in fiscal 2026, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipmentequipment, and improvements to the Company’s milk processing plant.

The Company currently expects that its annual capital expenditures will be in the range of approximately $120 to $140$130 million going forward in order to maintain a modern store base.base and to reopen the remaining temporarily closed stores. Among other things, planned expenditures for any given future fiscal year will be affected by the availability of financing, which can affect both the number of projects pursued at any given time and the cost of those projects. The number of projects may also fluctuate due to the varying costs of the types of projects pursued including new stores and major remodel/expansions. The Company makes decisions on the allocation of capital expenditure dollars based on many factors including the competitive environment, other Company capital initiatives and its financial condition.

The Company generated $122.2$189.2 million of net cash from operations for the sixnine-month monthsperiod ended MarchJune 28,27, 2026 compared with $19.4$94.2 million for the sixnine-month monthsperiod ended MarchJune 29,28, 2025. CashNet cash from operations increased by $102.8 million due to higher net income for the six months ended March 28, 2026 compared with the six months ended March 29, 2025 and decreases in working capital needs primarilyduring relatedthe June 2026 nine-month period compared with the June 2025 nine-month period. For the nine -month period ended June 28, 2025, the Company experienced increased working capital needs to replenishment ofreplenish inventory infollowing the priorimpact year due toof Hurricane Helene.

Cash used by investing activities for the six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 totaled $52.6$75.7 million and $57.9$86.9 million, respectively, consisting primarily of capital expenditures.

Cash used by financing activities totaled $17.9$24.6 million for boththe nine-month period ended June 27, 2026 compared with $24.9 million for the six-monthnine-month periodsperiod ended MarchJune 28, 20262025. andCash Marchused 29,by 2025,financing whichactivities primarily consisted of payments oncomprises our long-termdebt borrowingsservice obligations and dividends paid on our common stock.

The Company has a $150.0 million line of credit (the “Line”), that, as amended in June 2025, matures in June 2030 .2030. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which a single letter of credit in the amount of $900,000 was issued at MarchJune 28,27, 2026. The Company is not required to maintain compensating balances in connection with the Line. At MarchJune 28,27, 2026, the Company had no other borrowings outstanding under the Line.

In December 2010, the Company completed the funding of $99.7 million of bonds (the “Bonds”) for the construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”). The Project was completed in 2012, and the final maturity date of the Bonds is January 1, 2036.

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions have agreed to hold the Bonds until December 17, 2029, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014. The outstanding balance of the Bonds was $40.9 million as of MarchJune 28,27, 2026. The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.

In September 2017, the Company refinanced approximately $60 million secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate maturing in October 2027. As of MarchJune 28,27, 2026, the Company has an interest rate swap agreement for a notional amount of $9.5$8.0 million at a fixed rate of 3.962%. Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%. The interest rate swap effectively hedges floating rate debt in the same amount as the notional amount of the interest rate swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.5 million and mature October 1, 2027.

In December 2019, the Company entered into a $155 million SOFR-based amortizing floating rate loan secured by real estate maturing in January 2030. As of MarchJune 28,27, 2026, the Company has an interest rate swap agreement for a notional amount of $105.3$103.3 million at a fixed rate of 2.998%. Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%. The interest rate swap effectively hedges floating rate debt in the same amount as the notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.65 million and mature in fiscal year 2030.

The Company’s long-term debt agreements generally contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Line are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, or the failure of the Company to meet certain financial covenants designated in its loan documents. As of MarchJune 28,27, 2026, the Company was in compliance with these covenants.

It is possible that, in the future, the Company’s results of operations and financial condition will be different from that described in this Quarterly Report on Form 10-Q based on a number of factors. These factors may include, among others, increased competition, changing regional and national economic conditions, adverse climatic conditions affecting food production and delivery, natural disasters, changing demographics, and pandemics or other health emergencies, as well as the additional factors discussed below under “Forward LookingForward-Looking Statements” and under the heading “Risk Factors” contained in our most recently filed Annual Report on Form 10-K, as well as under similar headings in our Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission.