10-QPeriod: Q1 FY2009

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2008

Filed September 8, 2008For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its financial results for the first quarter ended July 31, 2008. The company experienced a revenue increase of 22.4% to $1.57 billion, primarily driven by a significant rise in gasoline sales due to both increased gallons sold and higher average prices. However, net earnings saw a slight decrease of 3.3% to $28.8 million, impacted by increased operating expenses, including charges related to flood-damaged stores and higher credit card fees. Despite the dip in net earnings, the company's balance sheet shows a healthy increase in cash and cash equivalents, growing to $171.5 million from $154.5 million in the prior quarter. While current liabilities also increased, the overall liquidity position remains stable, with a current ratio of 1.22:1. Management is focused on reinvesting in stores and anticipates capital expenditures of approximately $130 million for fiscal year 2009, funded by operations and existing cash.

Key Highlights

  • 1Total revenue increased by 22.4% to $1.57 billion, largely driven by a 27.9% increase in retail gasoline sales.
  • 2Net earnings decreased by 3.3% to $28.8 million, primarily due to higher operating expenses, including flood-related charges.
  • 3Cash and cash equivalents increased by $17 million sequentially to $171.5 million, indicating strong operational cash generation.
  • 4Gross profit margin on retail gasoline sales decreased to 4.1% from 5.3% in the prior year period, while prepared food margins also declined slightly.
  • 5The company plans significant capital expenditures of approximately $130 million for fiscal year 2009, focusing on store improvements and expansion.
  • 6Ongoing litigation, particularly concerning overtime pay and 'hot fuel' cases, remains a significant factor, though management believes it will not have a material adverse effect.

Frequently Asked Questions

Revenue growth was primarily driven by a substantial increase in retail gasoline sales, which rose by 27.9%. This was a result of a 1.4% increase in gallons sold coupled with a significant 26.1% rise in the average retail price per gallon. Sales of grocery and general merchandise, as well as prepared food and fountain items, also contributed positively.

Net earnings decreased by 3.3% primarily due to an increase in operating expenses. This included $2.55 million in impairment charges for five flood-damaged stores and an additional $0.7 million for other stores, as well as higher credit card fees resulting from increased credit card usage and higher gasoline prices.

Casey's General Stores plans to invest approximately $130 million in capital expenditures for fiscal year 2009, focusing on store construction, acquisition, and remodeling. The company expects to fund these expenditures through existing cash and funds generated from operations, and believes its current credit line and cash flow will be sufficient to meet working capital needs.

Yes, Casey's is involved in several significant legal matters, including class-action lawsuits concerning overtime pay for managers and 'hot fuel' cases alleging misrepresentation of gasoline volumes. While management intends to contest these vigorously, they state that the ultimate disposition of these matters is not expected to have a material adverse effect on the company's financial position or results of operations.