10-KPeriod: FY2016

CASEYS GENERAL STORES INC Annual Report, Year Ended Apr 30, 2016

Filed June 27, 2016For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) operates a network of convenience stores primarily in 14 Midwestern states, with a strong presence in smaller communities. For the fiscal year ended April 30, 2016, the company reported total revenue of $7.12 billion, a decrease from the previous year, primarily driven by a significant drop in average retail fuel prices. Despite lower fuel revenue, the company saw an increase in total fuel gallons sold and a substantial rise in inside sales, particularly in prepared foods and merchandise. The company's strategic focus on high-margin prepared food items, such as pizza and donuts, continues to be a key driver of profitability, contributing a disproportionately large share of gross profit relative to its revenue contribution. Significant investments in store remodels, new constructions, and acquisitions are evident, alongside efforts to improve operational efficiency through energy-saving initiatives and technology adoption. Casey's also operates a robust fuel business, which, while experiencing price volatility, remains a substantial revenue generator and a key traffic driver for its stores.

Financial Highlights

49 data points
Beta

Revenue

$7.12B

22.7% Gross Margin

Net Income

$225.98M

3.2% Net Margin

EPS (Diluted)

$5.73

Total Assets

$2.73B

Cash & Equivalents

$75.78M

Free Cash Flow

$79.55M

Financial Statements
Beta
Revenue$7.12B
Cost of Revenue$5.51B
Gross Profit$1.61B
Operating Expenses$1.05B
Interest Expense$40.17M
Net Income$225.98M
EPS (Basic)$5.79
EPS (Diluted)$5.73
Shares Outstanding (Basic)39.02M
Shares Outstanding (Diluted)39.42M

Key Highlights

  • 1Total revenue for FY 2016 was $7.12 billion, a decrease of 8.3% from FY 2015, largely due to a 24% decrease in average retail fuel prices.
  • 2Inside sales (grocery & merchandise and prepared food & fountain) increased by 10.8% to $2.85 billion, indicating a successful shift towards higher-margin products.
  • 3Gross profit margin improved significantly to 22.7% in FY 2016 from 18.5% in FY 2015, driven by a stronger fuel margin (9.1% vs. 6.8%) and a healthy prepared food & fountain margin (62.5%).
  • 4The company opened 51 new stores and completed 102 major remodels in FY 2016, demonstrating continued investment in store network expansion and modernization.
  • 5Net income increased by 25.1% to $226 million in FY 2016, with diluted earnings per share rising to $5.73 from $4.62 in the prior year.
  • 6Fuel gallons sold increased by 7.4% to 2 billion gallons, despite the decrease in revenue, highlighting the effectiveness of competitive pricing strategies and increased store count.
  • 7The company generated $464.7 million in cash flow from operating activities, a substantial increase from $341.7 million in FY 2015, supporting continued capital expenditures.

Frequently Asked Questions

Casey's primary strategy is to operate convenience stores in smaller Midwestern communities, offering a broad selection of products including fuel and high-margin prepared foods. The FY 2016 results reflect this through a significant increase in inside sales, particularly prepared foods, which contributed a large portion of the gross profit. The company also continued to expand its store footprint through new constructions and remodels, reinforcing its presence in its target markets.

Casey's acknowledges the significant volatility in wholesale petroleum costs and its impact on fuel margins. For FY 2016, the company managed this by increasing its fuel gallons sold (up 7.4%) and improving its fuel gross profit margin to 9.1% from 6.8% in the prior year. This was partly attributed to price competition and the sale of renewable fuel credits (RINs). While fuel revenue decreased due to lower prices, the volume growth and improved margins helped mitigate the impact on overall profitability.

Key risks identified include intense competition in the convenience store and fuel industries, volatility in wholesale petroleum costs, changing consumer preferences (e.g., for alternative fuels), increased credit card expenses, potential increases in tobacco taxes and regulations, and cybersecurity threats. The company's reliance on its extensive store network in the Midwest also makes it susceptible to unfavorable weather conditions. Additionally, future litigation and the ability to integrate acquisitions are noted as potential concerns.

Casey's demonstrated strong net income growth in FY 2016, increasing by 25.1% to $225.98 million from $180.63 million in FY 2015. Diluted earnings per share also saw a significant rise, from $4.62 in FY 2015 to $5.73 in FY 2016, reflecting improved operational performance and effective cost management.