01—Abstract
Summary
Summary of the 10-K filed June 29, 2017. Cited figures are marked; the original filing is the authoritative source.
Casey's General Stores, Inc. (CASY) operates a network of convenience stores primarily in 15 Midwestern states.
As of April 30, 2017, the company reported 1,978 stores in operation, with a strategic focus on smaller communities (57%a of stores in populations under 5,000) while also serving larger towns. The business model emphasizes a broad product selection, including freshly prepared foods like pizza and donuts, alongside fuel sales, which accounted for approximately 59% of total revenue in fiscal year 2017. The company demonstrated revenue growth in fiscal year 2017, driven by an increase in fuel gallons sold and strong inside sales.
However, net income saw a decrease compared to the prior year, attributed to a weaker agricultural economy impacting customer traffic and rising wage costs. Despite these challenges, Casey's continues to invest in growth through new store construction, acquisitions, and major remodels, underscoring a commitment to expansion and operational improvement. The company also maintains a shareholder-friendly approach with a consistent dividend payout and a recently initiated share repurchase program.
02—Key points
Key Highlights
- The company operated 1,978 convenience stores across 15 Midwestern states as of April 30, 2017, with a significant presence in smaller communities.
- Fuel sales represented approximately 59% of total revenue ($4.41 billion) in fiscal year 2017, with inside sales (merchandise and prepared foods) contributing the remaining 41%.
- Total revenue increased by 5.4% to $7.51 billion in fiscal year 2017, driven by higher fuel gallon sales and a 6.5% increase in inside sales.
- Net income decreased by 21.5% to $177.5 million in fiscal year 2017, primarily due to a weaker agricultural economy affecting customer traffic and increased operating expenses, notably wages.
- The company acquired 22 stores and completed 48 new store constructions in fiscal year 2017, indicating a focus on expansion.
- Gross profit margin for prepared food and fountain items remained strong at approximately 62.3% in fiscal year 2017, highlighting the profitability of this segment.
- Casey's initiated a $300 million share repurchase program during the fourth quarter of fiscal year 2017 and repurchased approximately $49.4 million of its stock by year-end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed June 29, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $7.51B$7.12B | +5.4% |
| Cost of Revenue | $5.83B$5.51B | +5.8% |
| Gross Profit | $1.68B$1.61B | +4.2% |
| Operating Expenses | $1.17B$1.05B | +11.2% |
| Interest Expense | $41.54M$40.17M | +3.4% |
| Net Income | $177.49M$225.98M | −21.5% |
| EPS (Basic) | $4.54$5.79 | −21.6% |
| EPS (Diluted) | $4.48$5.73 | −21.8% |
| Shares Outstanding (Basic) | 39.12M39.02M | +0.3% |
| Shares Outstanding (Diluted) | 39.58M39.42M | +0.4% |
05—Questions
Frequently Asked Questions
What is Casey's General Stores' primary business and geographic focus?
Casey's General Stores primarily operates convenience stores under the 'Casey's' and 'Casey's General Store' names. Their geographic focus is on 15 Midwestern states, with a particular emphasis on smaller communities (populations under 5,000), though they also serve larger towns. Their business model combines convenience store offerings with fuel sales and a significant focus on freshly prepared foods like pizza and donuts.
How did Casey's perform financially in fiscal year 2017 compared to fiscal year 2016?
In fiscal year 2017, Casey's saw an increase in total revenue to $7.51 billion, up 5.4% from $7.12 billion in fiscal year 2016. This growth was driven by higher fuel gallon sales and a 6.5% increase in inside sales. However, net income decreased to $177.5 million from $226.0 million in the prior year. This decline was attributed to a weaker agricultural economy impacting customer traffic and increased operating expenses, particularly wages.
What are the key growth strategies for Casey's?
Casey's growth strategy involves expanding its store network through new constructions and acquisitions. In fiscal year 2017, they acquired 22 stores and built 48 new ones. They also focus on enhancing profitability through initiatives like major store remodels and expanding their prepared food offerings, which have high gross profit margins. The company also returns value to shareholders through dividends and a share repurchase program.
What are the main risks facing Casey's General Stores as highlighted in the filing?
Key risks include intense competition in the convenience store and fuel industries, the volatility of wholesale petroleum costs affecting fuel margins, potential shifts towards alternative motor fuels, increased credit card expenses, and regulatory changes affecting tobacco products. Additionally, the company faces risks related to general economic conditions, unfavorable weather, cybersecurity threats, and the ability to identify and integrate new store acquisitions.
06—Continue