01—Abstract
Summary
Summary of the 10-K filed June 29, 2018. Cited figures are marked; the original filing is the authoritative source.
Casey's General Stores, Inc. (CASY) reported its fiscal year results ending April 30, 2018, highlighting robust revenue growth driven by a significant increase in fuel prices and sales volume, alongside a rise in inside sales.
The company expanded its store footprint through new constructions and acquisitions, demonstrating a clear growth strategy. Despite increased operating expenses, the company saw a substantial boost in net income, largely influenced by the one-time benefit from the Tax Cuts and Jobs Act of 2017, which significantly lowered its effective tax rate. While revenue from fuel remains the largest contributor, the company continues to emphasize its higher-margin prepared food and merchandise offerings.
Management's strategic focus on operational efficiencies, such as energy-saving initiatives and store remodels, aims to mitigate rising costs. Investors should note the company's ongoing expansion efforts, its reliance on fuel sales, and the impact of macroeconomic factors such as agricultural economy conditions and fuel price volatility.
02—Key points
Key Highlights
- Total revenue increased by 11.8% to $8.39 billion, driven by a 9.3% increase in fuel prices and a 6.6% increase in fuel gallons sold, alongside a 4.9% rise in inside sales.
- Net income saw a significant increase to $317.9 million, primarily due to a one-time $173 million tax benefit from the Tax Cuts and Jobs Act of 2017, which reduced the effective tax rate to -48.3%.
- The company acquired 26 additional convenience stores and completed 85 new store constructions in fiscal 2018, expanding its network to 2,073 stores.
- Gross profit margin for fuel decreased to 7.9% from 8.6% year-over-year, while prepared food and fountain margins also saw a slight decline, though grocery and other merchandise margins improved slightly.
- Operating expenses increased by 9.4%, largely due to expenses associated with new and acquired stores and expanded operating programs.
- The company maintained a strong focus on returning capital to shareholders, with dividends declared per share increasing and continued share repurchases under authorized programs.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed June 29, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $8.39B$7.51B | +11.8% |
| Gross Profit | $1.77B$1.68B | +5.2% |
| Operating Expenses | $1.28B$1.17B | +9.4% |
| Interest Expense | $50.94M$41.54M | +22.6% |
| Net Income | $317.90M$177.49M | +79.1% |
| EPS (Basic) | $8.41$4.54 | +85.2% |
| EPS (Diluted) | $8.34$4.48 | +86.2% |
| Shares Outstanding (Basic) | 37.78M39.12M | −3.4% |
| Shares Outstanding (Diluted) | 38.13M39.58M | −3.7% |
05—Questions
Frequently Asked Questions
What was the primary driver of Casey's revenue growth in fiscal 2018?
Casey's General Stores experienced robust revenue growth in fiscal 2018, primarily driven by a significant increase in fuel prices (up 9.3%) and a corresponding increase in fuel gallons sold (up 6.6%). Inside sales, encompassing grocery, merchandise, and prepared foods, also contributed positively with a 4.9% increase.
How did the Tax Cuts and Jobs Act of 2017 impact Casey's financial results?
The Tax Cuts and Jobs Act of 2017 had a substantial one-time positive impact on Casey's net income. The company recorded a benefit of approximately $173 million due to the remeasurement of deferred tax assets and liabilities, reflecting the permanent reduction in the U.S. corporate income tax rate from 35% to 21% (phased in to 30.4% for fiscal year 2018). This significantly reduced the company's effective tax rate to -48.3% for the fiscal year.
What is Casey's strategy for growth and store expansion?
Casey's employs a multi-faceted growth strategy, which includes new store constructions and strategic acquisitions. In fiscal year 2018, the company opened 85 new stores and acquired 26 additional convenience stores, expanding its total store count to 2,073 locations across 16 Midwestern states. The company aims to strategically locate stores in smaller towns, offering a broader product selection than typical convenience stores.
What are the key risks identified by Casey's management for the business?
Casey's faces several key risks, including intense competition within the convenience store and fuel industries, volatility in wholesale petroleum costs, potential decreases in fuel demand due to fuel efficiency and alternative energy vehicles, increased credit card expenses, and fluctuations in wholesale costs of tobacco products and other commodities. Data security breaches, unfavorable weather conditions, and challenges in adapting to changing consumer preferences are also noted risks.
06—Continue