10-QPeriod: Q1 FY2014

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2013

Filed September 9, 2013For Securities:CASY

Summary

Caseys General Stores, Inc. (CASY) reported strong revenue and net income growth for the first quarter of fiscal year 2014, ending July 31, 2013. Total revenue increased by 13.2% to $2.11 billion compared to the prior year, driven by robust performance in gasoline, grocery, and prepared food sales. Net income saw a significant jump of 42.7% to $55.7 million, with diluted earnings per share rising to $1.43 from $1.01 in the prior year's quarter. This growth was largely fueled by a substantial improvement in gasoline gross profit margins and increased same-store sales across all key categories. The company also demonstrated solid operational execution, with a 14% increase in operating expenses being managed in line with revenue growth, partly due to the addition of 51 new stores. Liquidity remains strong, with cash from operations increasing by 29.8%, supported by a healthy current ratio of 1.10:1. Management's outlook indicates continued investment in store growth and infrastructure, with plans to build or acquire 70-105 stores and replace 20 existing locations annually. The company anticipates sufficient liquidity from operations, its credit line, and potential debt financing to support these initiatives.

Financial Highlights

44 data points
Beta

Revenue

$2.11B

16.2% Gross Margin

Net Income

$53.80M

2.5% Net Margin

EPS (Diluted)

$1.39

Total Assets

$2.19B

Cash & Equivalents

$190.95M

Free Cash Flow

$65.78M

Financial Statements
Beta
Revenue$2.11B
Cost of Revenue$1.77B
Gross Profit$342.42M
Operating Expenses$215.97M
Interest Expense$9.58M
Net Income$53.80M
EPS (Basic)$1.40
EPS (Diluted)$1.39
Shares Outstanding (Basic)38.39M
Shares Outstanding (Diluted)38.83M

Key Highlights

  • 1Total revenue increased by 13.2% to $2.11 billion for the first quarter of FY2014, compared to $1.87 billion in FY2013.
  • 2Net income grew by 42.7% to $55.7 million, with diluted EPS increasing to $1.43 from $1.01 year-over-year.
  • 3Gasoline gross profit margin improved significantly to 6.2% (22.1 cents/gallon) from 4.4% (14.9 cents/gallon), boosted by fuel saver programs and renewable fuel credits.
  • 4Same-store sales showed strong growth: gasoline gallons sold increased by 3.2%, grocery and merchandise sales by 6.1%, and prepared food and fountain sales by 11.9%.
  • 5Operating expenses increased by 14%, attributed to 51 more stores, expanded 24-hour operations, and increased pizza delivery, with operating expenses as a percentage of revenue remaining stable at 10.2%.
  • 6Net cash provided by operations increased by 29.8% to $138.2 million, indicating strong operational cash generation.
  • 7The company plans to continue aggressive expansion, with goals to build or acquire 70-105 stores and replace 20 locations annually.

Frequently Asked Questions

Revenue growth was primarily driven by a 13.8% increase in retail gasoline sales due to higher volumes (8.2% increase in gallons sold) and a 5% increase in average retail price per gallon. Additionally, grocery and general merchandise sales increased by 9.7%, and prepared food and fountain sales rose by 16.5%, both supported by the addition of new stores and operational initiatives like pizza delivery and 24-hour operations.

Operating expenses increased by 14%, largely due to the 51 additional stores in operation, expanded 24-hour operations, and increased pizza delivery services. However, operating expenses as a percentage of total revenue remained stable at approximately 10.2%, indicating effective cost management relative to revenue growth.

Casey's General Stores is committed to aggressive expansion, with annual goals to build or acquire 70-105 stores and replace 20 existing locations. Capital expenditures for the first quarter were $74.1 million, primarily for property and equipment related to store construction and remodeling. Management expects to fund these initiatives through cash generated from operations, its bank line of credit, and potential additional debt financing.

The company maintains a healthy liquidity position. Net cash provided by operations increased significantly by 29.8% to $138.2 million. The current ratio stood at a strong 1.10:1 as of July 31, 2013. Management believes that existing cash flows, combined with its $100 million bank line of credit, are sufficient to meet working capital and capital expenditure needs.