10-QPeriod: Q1 FY2012

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2011

Filed September 9, 2011For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported solid revenue growth for the three months ended July 31, 2011, driven by a significant increase in retail gasoline sales due to higher prices and increased gallons sold, along with strong performance in grocery/merchandise and prepared food/fountain categories. Despite a lower gross profit margin overall, particularly in gasoline and prepared foods, the company saw an increase in net earnings. This was supported by effective cost management, leading to a decrease in operating expenses as a percentage of revenue, and strong operational cash flow generation. Financially, the company expanded its asset base, notably with an increase in goodwill and property/equipment, reflecting recent acquisitions and capital expenditures. Long-term debt remains substantial, though interest expense increased due to new senior notes. Cash flow from operations was robust, largely offsetting significant investments in property and equipment and acquisitions. The company remains focused on store growth and reinvestment, indicating a continued commitment to expansion and operational efficiency.

Financial Highlights

45 data points
Beta

Revenue

$1.87B

14.2% Gross Margin

Net Income

$39.39M

2.1% Net Margin

EPS (Diluted)

$1.03

Total Assets

$1.71B

Cash & Equivalents

$139.02M

Free Cash Flow

$115.34M

Financial Statements
Beta
Revenue$1.87B
Cost of Revenue$1.61B
Gross Profit$266.78M
Operating Expenses$171.42M
Interest Expense$8.93M
Net Income$39.39M
EPS (Basic)$1.04
EPS (Diluted)$1.03
Shares Outstanding (Basic)38.02M
Shares Outstanding (Diluted)38.33M

Key Highlights

  • 1Total revenue for the quarter increased by 37.6% to $1.87 billion, primarily driven by a 47.1% increase in retail gasoline sales due to a 39.1% rise in average retail price per gallon and a 6.0% increase in gallons sold.
  • 2Same store sales for grocery and other merchandise increased by 6.2%, and prepared foods and fountain increased by 15.3%, indicating strong in-store performance.
  • 3Total gross profit margin decreased to 14.2% from 17.2% in the prior year, mainly due to lower margins on gasoline (4.7% vs 6.3%) and prepared foods (61.2% vs 63.8%), despite higher per-gallon gasoline margins.
  • 4Operating expenses increased by 12.5% but decreased as a percentage of total revenue to 9.1% from 11.2%, benefiting from higher revenues and the absence of significant prior-year legal fees.
  • 5Net earnings increased by 5.6% to $39.4 million, or $1.04 per diluted share ($1.03), compared to $37.3 million, or $0.73 per diluted share, in the prior year.
  • 6Cash flow from operations significantly increased by 57.1% to $162.9 million, supporting substantial investments in property and equipment ($47.5 million) and acquisitions ($31.1 million).
  • 7The company acquired 27 stores during the quarter and has a strategic goal to increase the number of stores by 4% to 6% annually.

Frequently Asked Questions

Revenue growth was primarily driven by a substantial increase in retail gasoline sales, fueled by higher average retail prices per gallon and a modest increase in gallons sold. Additionally, sales from grocery and other merchandise, as well as prepared foods and fountain drinks, showed strong year-over-year growth.

While net earnings increased by 5.6% to $39.4 million, the overall gross profit margin declined due to lower margins in gasoline and prepared food categories, attributed to factors like competitive pricing and rising commodity costs. However, operating expenses as a percentage of revenue decreased, helping to offset margin pressures and contribute to the net earnings increase.

Casey's General Stores is pursuing growth through both organic development (new store construction) and strategic acquisitions, having acquired 27 stores in the quarter. The company aims to increase its store count by 4% to 6% annually and continues to invest in property and equipment to enhance its store offerings and operational efficiency.

As of July 31, 2011, the company had significant long-term debt totaling $678.7 million. Despite this, liquidity appears adequate, supported by a strong increase in cash flow from operations, which funded significant capital expenditures and acquisitions. The company also has an existing $100 million bank line of credit available.