10-KPeriod: FY2018

CASEYS GENERAL STORES INC Annual Report, Year Ended Apr 30, 2018

Filed June 29, 2018For Securities:CASY

Summary

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.

Financial Highlights

48 data points
Beta

Revenue

$8.39B

21.1% Gross Margin

Net Income

$317.90M

3.8% Net Margin

EPS (Diluted)

$8.34

Total Assets

$3.47B

Cash & Equivalents

$53.68M

Free Cash Flow

-$157.62M

Financial Statements
Beta
Revenue$8.39B
Gross Profit$1.77B
Operating Expenses$1.28B
Interest Expense$50.94M
Net Income$317.90M
EPS (Basic)$8.41
EPS (Diluted)$8.34
Shares Outstanding (Basic)37.78M
Shares Outstanding (Diluted)38.13M

Key Highlights

  • 1Total 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.
  • 2Net 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%.
  • 3The company acquired 26 additional convenience stores and completed 85 new store constructions in fiscal 2018, expanding its network to 2,073 stores.
  • 4Gross 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.
  • 5Operating expenses increased by 9.4%, largely due to expenses associated with new and acquired stores and expanded operating programs.
  • 6The company maintained a strong focus on returning capital to shareholders, with dividends declared per share increasing and continued share repurchases under authorized programs.

Frequently Asked Questions

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.

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.

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.

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.