10-QPeriod: Q2 FY2002

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2001

Filed December 12, 2001For Securities:CASY

Summary

Casey's General Stores, Inc. reported its results for the fiscal quarter and six months ended October 31, 2001. For the three months ended October 31, 2001, net sales increased by 12.5% to $557.7 million compared to the prior year, driven by a 12.7% increase in retail gasoline sales and a 15.5% increase in grocery and general merchandise sales. However, net income for the quarter decreased by 10.4% to $12.4 million, primarily due to reduced gross profit margins on both gasoline and grocery/merchandise sales. This margin compression was attributed to lower average gasoline prices, competitive pricing, and changes in product mix within the grocery segment. For the six months ended October 31, 2001, net sales grew by 10.9% to $1.14 billion, with similar drivers as the quarterly results. Net income for the six-month period declined by 15.1% to $25.1 million. The company continues to invest heavily in capital expenditures, with $54 million spent on property and equipment during the first six months of fiscal 2002, primarily for store construction, acquisition, and remodeling, and anticipates spending approximately $90 million for the full fiscal year. Despite the decrease in profitability per unit, the company's overall sales growth and continued investment in its store base signal an ongoing expansion strategy.

Key Highlights

  • 1Net sales for the quarter ended October 31, 2001, increased 12.5% to $557.7 million.
  • 2Net income for the quarter decreased 10.4% to $12.4 million, impacted by lower gross profit margins.
  • 3Six-month net sales grew 10.9% to $1.14 billion, while net income decreased 15.1% to $25.1 million.
  • 4Significant capital expenditures of $54 million were made in the first six months of fiscal 2002, with an annual projection of $90 million for store expansion and remodeling.
  • 5Gross profit margins on retail gasoline sales decreased to 8.0% for the quarter and 7.1% for the six months, compared to prior year periods.
  • 6Gross profit margins on grocery and general merchandise sales also decreased due to competitive pricing and product mix changes.

Frequently Asked Questions

Revenue growth is primarily driven by increases in retail gasoline sales and sales of grocery and general merchandise. This growth is supported by the addition of new company stores and a greater number of stores operating for at least three years.

Net income decreased due to compressed gross profit margins. For gasoline, this was caused by a decrease in the average retail price per gallon and a lower gross profit margin per gallon. For grocery and general merchandise, the decrease in gross profit was attributed to competitive pricing, changes in product mix (such as the dominance of cigarettes), and discounting of products during store resets.

The company funds its capital expenditures primarily through cash generated from operations, existing cash balances, short-term investments, and available bank lines of credit. Historically, proceeds from the sale of common stock and issuance of senior notes have also been used.

As of October 31, 2001, Casey's General Stores had approximately $180.6 million in long-term debt. The company's current ratio was 0.97 to 1. Management believes that current bank lines of credit and cash flow from operations are sufficient to meet working capital needs and anticipated growth.