10-QPeriod: Q1 FY2010

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2009

Filed September 8, 2009For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported strong performance for the three months ended July 31, 2009, with a significant increase in net earnings to $44.2 million, up from $28.8 million in the prior year period. This growth was driven by a combination of factors, including higher gross profit dollars from gasoline, grocery, and prepared food sales, as well as a lower effective tax rate. Total revenue saw a notable decrease of 24.2% to $1.19 billion, primarily due to a substantial decline in the average retail price per gallon of gasoline, despite a 5.5% increase in gasoline gallons sold. The company demonstrated improved operational efficiency, with operating expenses decreasing slightly in absolute terms despite the revenue decline. The gross profit margin for gasoline sales increased, and margins also saw improvement in grocery and prepared food categories. Casey's continues to invest in its store base, with capital expenditures primarily focused on new construction, acquisitions, and remodeling, funded through operations and existing credit facilities. The balance sheet remains solid, with a healthy current ratio and sufficient liquidity to meet working capital needs.

Financial Highlights

27 data points
Beta

Revenue

$1.19B

18.5% Gross Margin

Net Income

$44.19M

3.7% Net Margin

EPS (Diluted)

$0.87

Cash & Equivalents

$170.78M

Free Cash Flow

$43.70M

Financial Statements
Beta
Revenue$1.19B
Cost of Revenue$967.82M
Gross Profit$220.13M
Operating Expenses$132.36M
Interest Expense$2.70M
Net Income$44.19M
EPS (Basic)$0.87
EPS (Diluted)$0.87
Shares Outstanding (Basic)50.86M
Shares Outstanding (Diluted)51.00M

Key Highlights

  • 1Net earnings increased significantly by 53.5% to $44.2 million for the three months ended July 31, 2009, compared to $28.8 million in the prior year.
  • 2Total revenue decreased by 24.2% to $1.19 billion, largely due to a 37.7% decrease in the average retail price per gallon of gasoline, although gallons sold increased by 5.5%.
  • 3Gross profit margin for gasoline sales improved to 6.7% from 4.1% year-over-year.
  • 4Prepared food and fountain sales increased by 11.1%, and grocery and other merchandise sales rose by 8.4%, driven by factors like higher cigarette revenues and menu popularity.
  • 5Operating expenses decreased by 0.3% in absolute terms, with notable reductions in credit card fees and transportation costs.
  • 6The effective tax rate decreased to 34.2% from 38.0%, benefiting from the expiration of statutes of limitations for unrecognized tax benefits.
  • 7Cash flow from operations increased by 21.1% to $74.5 million, supporting ongoing capital expenditures for store development.

Frequently Asked Questions

The increase in net earnings was driven by a higher gross profit on gasoline sales, increased sales of grocery/merchandise and prepared foods, and a lower effective tax rate. While total revenue decreased due to lower gasoline prices, the company managed to increase profit margins on fuel and achieve sales growth in its other key categories.

Casey's has effectively managed operating expenses, which decreased by 0.3% year-over-year. This was achieved through lower credit card fees (due to lower gasoline prices) and a significant decline in transportation costs. The company also benefited from the absence of impairment charges related to flood damage that occurred in the prior year's quarter.

Casey's plans to continue investing in its growth through capital expenditures, with approximately $165,000 anticipated for fiscal 2010, primarily for new store construction, acquisitions, and remodeling. These investments are funded by cash generated from operations and existing credit facilities, reflecting a strategy to enhance competitiveness and operating efficiencies.

The company is involved in legal proceedings, including 'hot fuel' cases and a settlement agreement for wage and hour claims totaling $11.7 million (partially covered by insurance). Management believes these matters will not have a material adverse effect on the financial position or results of operations. Environmental matters are being managed within the scope of existing regulations and trust fund reimbursements.