10-QPeriod: Q1 FY2002

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2001

Filed September 14, 2001For Securities:CASY

Summary

Casey's General Stores, Inc. reported its fiscal 2002 second-quarter results for the period ending July 31, 2001. The company experienced a 9.5% increase in net sales, driven by a 12.8% rise in gasoline gallon sales and a 14.6% increase in grocery and general merchandise sales, aided by the addition of 63 new stores. However, net income saw a decline of 19.2% compared to the prior year. This decrease was primarily attributed to a significant contraction in the gross profit margin on retail gasoline sales, which fell from 8.6% to 6.3%, and a lower profit margin per gallon. Despite the dip in profitability, the company continued its investment in growth, with capital expenditures for property and equipment increasing to $29.7 million, up from $28.5 million in the prior year, largely for store construction and remodeling. Management anticipates approximately $90 million in capital expenditures for fiscal 2002. The company's liquidity appears sufficient, with management confident that existing bank lines of credit and cash flow from operations will meet working capital needs, though the current asset to current liability ratio slightly decreased to 0.98:1 from 1.05:1 at the start of the fiscal year.

Key Highlights

  • 1Net sales increased by 9.5% to $578.9 million, primarily driven by higher gasoline and general merchandise sales.
  • 2Net income decreased by 19.2% to $12.7 million, largely due to a decline in gasoline gross profit margins.
  • 3Gross profit margin for retail gasoline decreased significantly to 6.3% from 8.6% year-over-year, impacting overall profitability.
  • 4Capital expenditures rose by 4.5% to $29.7 million, reflecting continued investment in store construction and remodeling.
  • 5Inventories increased by $12.7 million compared to the previous quarter, contributing to a decrease in net cash provided by operations.
  • 6Long-term debt stood at $182.0 million, with various senior notes and mortgage notes comprising the majority.
  • 7The company has no derivative instruments and expects new accounting standards (SFAS 141 & 142) to have an immaterial impact.

Frequently Asked Questions

Sales growth was driven by a combination of factors. Retail gasoline sales increased by 8.6% due to a 12.8% rise in gallons sold, despite a 3.7% decrease in the average retail price per gallon. Additionally, retail sales of grocery and general merchandise saw a substantial increase of 14.6%, attributed to the addition of 63 new Company Stores and a larger base of stores operating for at least three years.

The decrease in net income, despite higher sales, was primarily due to a significant decline in the gross profit margin on retail gasoline sales. The margin dropped from 8.6% in the prior year's quarter to 6.3% in the current quarter, and the profit margin per gallon also decreased, negatively impacting overall profitability.

The company experienced a notable increase in inventories during the quarter, which contributed to a decrease in net cash provided by operations. While management believes its current bank lines of credit and cash flow from operations are sufficient for working capital needs, the current asset to current liability ratio declined slightly. The company continues to fund capital expenditures primarily through operations, existing cash, and bank lines of credit.

Casey's General Stores is actively investing in its physical footprint, with capital expenditures for property and equipment increasing to $29.7 million in the quarter, primarily for store construction and remodeling. The company anticipates spending approximately $90 million on these initiatives throughout fiscal year 2002, indicating a continued focus on expansion and operational improvements.