01—Abstract
Summary
Summary of the 10-K filed June 23, 2023. Cited figures are marked; the original filing is the authoritative source.
Casey's General Stores, Inc. (CASY) reported robust performance for the fiscal year ended April 30, 2023, driven by continued store growth and strong sales in both its fuel and inside store categories.
The company operates a large network of convenience stores across 16 states, with a strategic focus on smaller communities. Revenue increased by 16.5%a, largely attributed to a higher store count, elevated fuel prices, and strategic pricing adjustments. The company's long-term strategic plan, focused on reinventing hospitality, accelerating unit growth, enhancing efficiencies, and investing in its people, appears to be yielding positive results, as evidenced by a significant increase in diluted Earnings Per Share (EPS).
Profitability saw improvement, with revenue less cost of goods sold (excluding depreciation and amortization) showing strength, particularly in grocery and general merchandise. While fuel remains a significant revenue driver (approximately 66%b of total revenue), the higher margin generated from inside store sales, especially prepared foods like pizza and donuts, is a key contributor to overall profitability. The company continues to expand its private label offerings and leverage its loyalty program, Casey's Rewards, which boasts over 6.4 million members.
Management anticipates continued elevated fuel prices and is strategically managing its fuel procurement to navigate market volatility. The company also demonstrates a commitment to growth through acquisitions and new store development, alongside investments in technology and employee development.
02—Key points
Key Highlights
- Total revenue increased by 16.5% to $15.09 billion, driven by a 3.6% increase in fuel gallons sold and a 16.5% rise in average fuel price, alongside growth in grocery and prepared food sales.
- Diluted EPS grew by 30.8% year-over-year to $11.91, indicating strong bottom-line performance.
- The company expanded its store count to 2,521, adding 69 net new stores through construction and strategic acquisitions, demonstrating a clear growth strategy.
- Prepared food and dispensed beverage revenue increased by 9.8%, with strong sales in pizza and donuts, highlighting the success of the company's focus on high-margin prepared food offerings.
- Casey's Rewards program reached over 6.4 million members, indicating successful customer engagement and loyalty initiatives.
- Operating expenses increased by 8.1%, partially due to the increased store count and higher credit card fees driven by elevated fuel prices, but overall profitability improved.
- The company ended the fiscal year with a strong liquidity position, including cash and cash equivalents of $378.9 million and an $850 million unsecured revolving credit facility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed June 23, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $15.09B$12.95B | +16.5% |
| Operating Expenses | $2.12B$1.96B | +8.1% |
| Interest Expense | $51.81M$56.97M | −9.1% |
| Net Income | $446.69M$339.79M | +31.5% |
| EPS (Basic) | $11.99$9.14 | +31.2% |
| EPS (Diluted) | $11.91$9.10 | +30.9% |
| Shares Outstanding (Basic) | 37.27M37.16M | +0.3% |
| Shares Outstanding (Diluted) | 37.52M37.36M | +0.4% |
05—Questions
Frequently Asked Questions
What are Casey's primary revenue streams and how did they perform in FY2023?
Casey's primary revenue streams are retail fuel sales and inside store sales, which include grocery, general merchandise, and prepared foods. For fiscal year 2023, total revenue reached $15.09 billion, with retail fuel sales accounting for approximately 66.4% ($10.03 billion) and grocery/general merchandise and prepared food/dispensed beverages making up the remainder. Retail fuel revenue increased by 20.6% due to higher prices and a 3.6% increase in gallons sold. Grocery and general merchandise revenue grew by 9.7%, and prepared food and dispensed beverage revenue increased by 9.8%.
How is Casey's managing fuel price volatility and its impact on profitability?
Casey's employs a centralized fuel team and has implemented procurement improvements to navigate fuel price volatility. While fuel sales constitute a large portion of revenue, the company focuses on growing profitability through higher-margin inside store sales, particularly prepared foods. The average revenue less cost of goods sold per gallon for fuel increased to 40.2 cents in FY2023 from 36.0 cents in FY2022, indicating improved fuel profitability margins despite price fluctuations. The company also anticipates elevated fuel prices to continue into FY2024.
What is Casey's strategy for growth, and how is it being executed?
Casey's growth strategy is multi-faceted, focusing on accelerating unit growth through new store construction and strategic acquisitions, alongside reinvesting in existing stores and enhancing operational efficiencies. In FY2023, the company grew its store count to 2,521, adding 69 net new stores. This included the acquisition of 47 stores, such as those from Minit Mart LLC. The company also continues to develop its long-term strategic plan aimed at reinventing hospitality, expanding its reach, improving efficiencies, and investing in its workforce.
How is Casey's addressing rising operating costs, particularly labor and ingredient costs?
Operating expenses increased by 8.1% in FY2023, driven by factors like a larger store footprint, higher credit card fees due to fuel prices, and increased incentive compensation due to strong performance. Labor costs, which form the majority of operating expenses, saw wage rate increases offset by a reduction in labor hours. The company also experienced higher ingredient costs, particularly for cheese, which impacted the gross margin for prepared foods, though this was partially mitigated by retail price adjustments and a focus on optimizing product mix and reducing waste (stales).
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