10-QPeriod: Q3 FY2012

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2012

Filed March 8, 2012For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported a strong performance for the nine months ended January 31, 2012, with total revenue increasing by 28.1% year-over-year to $5.24 billion, driven by significant growth in gasoline sales due to higher prices and increased gallons sold. Net earnings also saw a substantial increase of 30.4% to $93.7 million. The company continues to expand its store footprint, with plans for 4% to 6% annual growth, and has seen positive contributions from its prepared food and fountain category, alongside a solid performance in grocery and other merchandise sales. The balance sheet as of January 31, 2012, shows total assets of $1.72 billion, an increase from the prior year, supported by growth in property and equipment and goodwill. Liabilities also increased, primarily due to long-term debt. The company's liquidity remains a focus, with a current ratio of 0.92:1, and management is confident that operational cash flow and existing credit lines are sufficient to meet working capital needs. Despite increased operating expenses and interest expense, the company's strategic investments in store growth and operational efficiencies are contributing to its positive financial trajectory.

Financial Statements
Beta
Revenue$1.58B
Cost of Revenue$1.35B
Gross Profit$227.84M
Operating Expenses$169.23M
Interest Expense$8.73M
Net Income$16.16M
EPS (Basic)$0.42
EPS (Diluted)$0.42
Shares Outstanding (Basic)38.07M
Shares Outstanding (Diluted)38.46M

Key Highlights

  • 1Total revenue for the nine months ended January 31, 2012, grew by 28.1% to $5.24 billion, largely driven by a 33.3% increase in gasoline sales.
  • 2Net earnings for the nine months increased by 30.4% to $93.7 million, compared to $71.9 million in the prior year period.
  • 3Basic earnings per common share for the nine months rose to $2.46 from $1.64 in the prior year.
  • 4The company continues its store expansion strategy, with 33 stores acquired in the first nine months of fiscal 2012 and plans for 4-6% annual growth.
  • 5Gross profit margin for gasoline sales decreased to 4.7% for the nine-month period, but the margin per gallon increased to $0.1587.
  • 6Prepared food and fountain sales increased by 19.9% for the nine months, although the gross profit margin decreased to 60.6% due to higher commodity costs.
  • 7Total assets grew to $1.72 billion, with significant increases in property and equipment, and goodwill, reflecting ongoing investments and acquisitions.

Frequently Asked Questions

The primary driver of revenue growth is the significant increase in gasoline sales, which rose by 33.3% for the nine months ended January 31, 2012. This growth is attributed to both an increase in the number of gallons sold and a substantial rise in the average retail price per gallon.

Casey's General Stores is actively expanding its store footprint by acquiring and constructing new stores, aiming for 4-6% annual growth. During the first nine months of fiscal 2012, the company acquired 33 stores and invested $222.3 million in property and equipment for construction, acquisition, and remodeling. Capital expenditures are primarily funded by operations and existing credit lines.

Key challenges include the volatility of the gasoline market, which impacts profit margins, intense competition from various retail formats, rising commodity costs affecting prepared food margins, and potential impacts from tobacco product regulations and taxes. The company is also involved in 'hot fuel' litigation, though management does not believe it will have a material adverse effect.

Inventories are valued at the lower of cost or market, using FIFO for gasoline and LIFO/retail inventory method for merchandise. Vendor allowances, such as rack display allowances and billbacks, are recognized as a reduction in cost of sales, impacting gross profit. These policies are standard for the retail industry.