10-QPeriod: Q3 FY2010

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2010

Filed March 10, 2010For Securities:CASY

Summary

Caseys General Stores Inc. reported its third-quarter results for the period ending January 31, 2010. The company demonstrated robust top-line growth, with total revenue increasing by 31.2% year-over-year, primarily driven by a significant rise in retail gasoline sales due to higher prices per gallon, despite a slight decrease in gallons sold. Growth was also observed in grocery, general merchandise, and prepared food categories, indicating resilience in its core offerings. The company's profitability saw a substantial increase, with net earnings up 23.0% for the quarter. This was supported by improved gross profit margins across most categories, particularly in gasoline where per-gallon margins expanded significantly. While operating expenses increased in absolute terms, they decreased as a percentage of revenue, reflecting effective cost management relative to the revenue surge. Investors should note the ongoing strategic investments in store expansion and upgrades, which contributed to higher capital expenditures but are expected to drive future growth.

Financial Highlights

27 data points
Beta

Revenue

$1.11B

15.8% Gross Margin

Net Income

$17.24M

1.5% Net Margin

EPS (Diluted)

$0.34

Cash & Equivalents

$152.89M

Free Cash Flow

$4.35M

Financial Statements
Beta
Revenue$1.11B
Cost of Revenue$937.78M
Gross Profit$176.60M
Operating Expenses$127.88M
Interest Expense$2.75M
Net Income$17.24M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)50.91M
Shares Outstanding (Diluted)51.10M

Key Highlights

  • 1Total revenue for the third quarter increased by 31.2% to $1.114 billion, driven by a 46.7% rise in retail gasoline sales due to higher prices.
  • 2Net earnings for the quarter grew by 23.0% to $17.2 million, or $0.34 per diluted share, compared to $0.28 per share in the prior year.
  • 3Gross profit margin for the quarter was 15.8%, with a notable improvement in gasoline gross profit per gallon ($.1237 vs $.0994).
  • 4Prepared food and fountain sales saw a 6.1% increase, indicating continued consumer demand for these higher-margin offerings.
  • 5Operating expenses increased by 7.5% but decreased as a percentage of total revenue to 11.5% (from 14.0%), driven by revenue growth.
  • 6The company continues to invest in growth, opening three newly constructed stores and replacing seven stores in the quarter, with an annual goal of increasing store count by 4%.
  • 7Cash provided by operations for the nine-month period increased significantly by 55.6% to $164.1 million, supporting increased investing activities.

Frequently Asked Questions

The primary driver of revenue growth was a significant increase in retail gasoline sales, up 46.7%, driven by a 45.7% rise in the average retail price per gallon. While gasoline gallons sold saw a slight decrease of 0.7%, the higher per-gallon price more than offset this.

Profitability improved significantly, with net earnings increasing by 23.0% to $17.2 million. Diluted earnings per share rose to $0.34 from $0.28 in the prior year. This was supported by an increase in gross profit dollars across all major categories and improved operating expense management as a percentage of revenue.

Caseys General Stores is focused on expanding its store footprint and reinvesting in existing locations. In the third quarter, they opened three new stores, replaced seven, and acquired 16 additional stores. The company aims for a 4% annual increase in store count and is investing in property and equipment, with approximately $175,000 planned for fiscal 2010 for construction, acquisition, and remodeling.

The company is involved in 'hot fuel' lawsuits, which allege misrepresentation of gasoline volumes due to temperature expansion. These are part of a larger, coordinated litigation across many states. While management believes it is not liable and intends to contest vigorously, the outcomes of such legal proceedings are uncertain, though management does not currently believe they will have a material adverse effect on financial position or results of operations.