10-QPeriod: Q2 FY2014

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2013

Filed December 9, 2013For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported strong financial performance for the six months ended October 31, 2013, with total revenue increasing by 9.3% year-over-year to $4.13 billion. This growth was driven by a combination of increased gasoline gallon sales and a significant uptick in grocery, general merchandise, and prepared food sales. The company demonstrated improved profitability, with net income rising by 35% to $97 million, largely attributable to a higher gross profit margin on gasoline, fueled by increased renewable fuel credits, and continued expansion. Financially, the company shows a robust increase in cash from operations, up 16.8%, and a strengthening current ratio to 1.03:1 as of October 31, 2013, indicating improved short-term liquidity. Strategic investments in store expansion, including 14 new-store constructions and 22 acquisitions during the period, underscore the company's commitment to growth. While operating expenses and depreciation increased due to these growth initiatives, the overall financial health appears sound, supported by a strong cash position and a revolving credit line.

Financial Highlights

44 data points
Beta

Revenue

$2.02B

15.8% Gross Margin

Net Income

$39.43M

2.0% Net Margin

EPS (Diluted)

$1.01

Total Assets

$2.19B

Cash & Equivalents

$113.27M

Free Cash Flow

-$43.35M

Financial Statements
Beta
Revenue$2.02B
Cost of Revenue$1.70B
Gross Profit$319.29M
Operating Expenses$216.53M
Interest Expense$9.90M
Net Income$39.43M
EPS (Basic)$1.03
EPS (Diluted)$1.01
Shares Outstanding (Basic)38.46M
Shares Outstanding (Diluted)38.89M

Key Highlights

  • 1Total revenue grew by 9.3% to $4.13 billion for the six months ended October 31, 2013.
  • 2Net income increased by a significant 35% to $97 million for the same period.
  • 3Gross profit margin on gasoline improved substantially due to higher renewable fuel credit sales.
  • 4The company continued its store expansion strategy, acquiring 22 stores and completing 14 new constructions in the first six months of fiscal 2014.
  • 5Cash flow from operations increased by 16.8% year-over-year.
  • 6The current ratio improved to 1.03:1 as of October 31, 2013, reflecting enhanced liquidity.

Frequently Asked Questions

The substantial increase in net income was primarily driven by an improvement in the gross profit margin on gasoline sales. This improvement was largely due to a significant increase in the sale of renewable fuel credits, along with overall growth in revenue from gasoline, grocery, and prepared food categories.

Casey's is funding its expansion through a combination of cash generated from operations, its revolving credit line, and long-term debt. Capital expenditures are a significant use of funds, directed towards new store constructions, acquisitions, and remodels.

The company is involved in a 'hot fuel' litigation matter, for which a preliminary settlement has been approved. While the monetary impact is not considered material, the company notes that other legal and administrative proceedings may arise. However, based on legal counsel's assessment, management believes the ultimate disposition of currently pending or threatened matters will not have a material adverse effect on the company's financial position or results of operations.

The company aims to increase the number of stores by 4% to 6% annually. Investments in store expansion, including new constructions and acquisitions, along with remodels, are key strategies. Management anticipates that cash generated from operations, its credit line, and potential additional debt will be sufficient to meet future capital needs.