10-KPeriod: FY2015

CASEYS GENERAL STORES INC Annual Report, Year Ended Apr 30, 2015

Filed June 26, 2015For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) operates a network of convenience stores primarily in Midwestern states, with a strong presence in smaller towns. For the fiscal year ended April 30, 2015, the company reported total revenue of $7.77 billion, a slight decrease of 0.9% compared to the previous year. This was primarily driven by a significant drop in average fuel prices, which offset increases in fuel gallons sold and robust growth in inside sales from merchandise and prepared foods. Net income saw a substantial increase of 42.4% to $180.6 million, with diluted EPS rising to $4.62 from $3.26 in the prior year. This improvement was largely attributed to higher fuel gross profit margins and increased inside sales. The company continues its growth strategy through new store constructions and acquisitions. In fiscal 2015, Casey's added 36 stores through acquisition and constructed 45 new stores. A key strategic focus is the expansion of high-margin prepared food offerings, such as pizza and donuts, which contribute significantly to gross profits. The company is also investing in infrastructure, including plans for a second distribution center to enhance efficiency and support expansion. Despite competitive pressures and volatile fuel costs, Casey's demonstrates resilience through its diversified revenue streams and strategic focus on in-store offerings.

Financial Statements
Beta
Revenue$7.77B
Cost of Revenue$6.33B
Gross Profit$1.44B
Operating Expenses$960.42M
Interest Expense$41.23M
Net Income$180.63M
EPS (Basic)$4.66
EPS (Diluted)$4.62
Shares Outstanding (Basic)38.74M
Shares Outstanding (Diluted)39.10M

Key Highlights

  • 1Net income increased significantly by 42.4% to $180.6 million in fiscal 2015, with diluted EPS rising to $4.62 from $3.26 in fiscal 2014.
  • 2Total revenue slightly decreased by 0.9% to $7.77 billion, impacted by lower average fuel prices, though fuel gallons sold and inside sales grew.
  • 3Inside sales (grocery & merchandise and prepared food & fountain) showed strong growth, increasing by 14.9% to $2.58 billion.
  • 4Fuel gross profit margin improved significantly to 6.8% from 4.8% in the prior year, benefiting from favorable wholesale cost movements.
  • 5The company continued its physical expansion, acquiring 36 stores and constructing 45 new stores during fiscal 2015.
  • 6Prepared food and fountain sales and gross profit continue to be a vital, high-margin component of the business, with gross profit margins averaging approximately 61% over the past three fiscal years.
  • 7The company announced plans to build a second distribution center in Terre Haute, Indiana, to support future expansion and improve distribution efficiency.

Frequently Asked Questions

Casey's General Stores, Inc. operates convenience stores primarily in Midwestern states. Its revenue is derived from the retail sale of fuel (approximately 66% of total revenue in FY 2015) and a broad selection of in-store products, including prepared foods like pizza and donuts, beverages, tobacco, health and beauty aids, and other non-food items. While fuel generates significant revenue, the higher-margin in-store products, particularly prepared foods, are crucial for profitability, contributing approximately 77% of gross profits in recent years.

In fiscal year 2015, Casey's reported a significant increase in net income to $180.6 million, up 42.4% from the prior year. Diluted earnings per share rose to $4.62. Total revenue saw a slight decrease of 0.9% to $7.77 billion, mainly due to lower average fuel prices, but this was partially offset by increased fuel gallons sold and strong growth in inside sales of merchandise and prepared foods.

Casey's growth is driven by a combination of new store construction and strategic acquisitions. The company is actively expanding its store footprint, having acquired 36 stores and built 45 new ones in fiscal 2015. A core strategy is the focus on high-margin prepared food offerings, such as made-from-scratch pizza and donuts, which are being expanded and improved. The company is also investing in its infrastructure with plans for a second distribution center to support growth and operational efficiency.

Casey's faces several risks, including intense competition in the convenience store and fuel retail industries, the volatility of wholesale petroleum costs impacting fuel margins, and changing consumer preferences. Other risks include increased credit card expenses, potential increases in tobacco taxes, litigation risks, cybersecurity threats, and the impact of general economic conditions. Environmental regulations and compliance costs associated with underground storage tanks are also a notable concern.