10-QPeriod: Q3 FY2014

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2014

Filed March 10, 2014For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its third quarter and nine-month results for fiscal year 2014, ending January 31, 2014. The company demonstrated revenue growth driven by increases in gasoline gallons sold and sales in its grocery and prepared food categories. The nine-month period saw a significant rise in net income, primarily attributed to improved gasoline gross profit margins, bolstered by renewable fuel credit sales, and expansion of the store base. Despite increased operating expenses related to store growth and initiatives like 24-hour operations and pizza delivery, the company managed to improve its overall gross profit margin. Financially, the company saw an increase in total assets, largely due to growth in property and equipment and a rise in goodwill. Liabilities also increased, notably long-term debt, which was utilized to fund capital expenditures and store acquisitions. Cash flow from operations remained robust, supporting the company's significant investments in property and equipment for new store construction and remodels. Investors should note the company's continued investment in expansion and infrastructure, alongside the ongoing efforts to enhance in-store offerings and operational efficiencies.

Financial Highlights

45 data points
Beta

Revenue

$1.79B

15.5% Gross Margin

Net Income

$12.66M

0.7% Net Margin

EPS (Diluted)

$0.33

Total Assets

$2.23B

Cash & Equivalents

$102.16M

Free Cash Flow

-$54.29M

Financial Statements
Beta
Revenue$1.79B
Cost of Revenue$1.51B
Gross Profit$276.69M
Operating Expenses$214.67M
Interest Expense$10.12M
Net Income$12.66M
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)38.48M
Shares Outstanding (Diluted)38.93M

Key Highlights

  • 1Total revenue for the nine months ended January 31, 2014, increased by 8.8% to $5.92 billion compared to the prior year.
  • 2Net income for the nine months ended January 31, 2014, rose by 27.9% to $111.7 million, driven by improved gasoline gross profit margins and renewable fuel credit sales.
  • 3The company's property and equipment, net of accumulated depreciation, increased significantly from $1.58 billion to $1.75 billion, reflecting substantial investment in store growth and improvements.
  • 4Total assets grew by approximately 12.2% to $2.23 billion, while total liabilities increased by approximately 10.3% to $1.52 billion, largely due to an increase in long-term debt.
  • 5Cash provided by operations for the nine months increased by 8.3% to $210.7 million, supporting significant capital expenditures.
  • 6Capital expenditures for the first nine months of fiscal 2014 totaled $269.1 million, primarily for property and equipment related to store construction, acquisition, and remodeling.
  • 7The company reported a 3.8% increase in same-store gasoline gallons sold in the third quarter and a 6.5% increase in same-store grocery and other merchandise sales.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in gasoline gallons sold (9.2% in Q3 and 9.1% year-to-date) and higher retail sales in grocery and general merchandise (10.7% in Q3 and 11.7% year-to-date) and prepared food and fountain (15.4% in Q3 and 16.4% year-to-date). The expansion of the store base, with 52 more stores in operation, along with expanded hours and more replacement/remodeled stores, also contributed significantly.

Net income increased by 27.9% for the nine months ended January 31, 2014, to $111.7 million. This was largely due to an increase in the gross profit margin on retail gasoline sales, driven by higher renewable fuel credit sales. While operating expenses increased due to store expansion and initiatives, the overall gross profit margin improved to 16.0% from 15.0% in the prior year.

The company's strategy focuses on acquiring and reinvesting in stores to enhance operational efficiencies and respond to competitive challenges. This growth is financed through a combination of cash generated from operations, a bank line of credit, and increased long-term debt. Capital expenditures for property and equipment, including store construction, acquisition, and remodeling, were significant at $269.1 million for the nine-month period.

As of January 31, 2014, the company had $853.7 million in long-term debt, net of current maturities, which increased from the previous year. The company's liquidity is supported by strong cash flow from operations and an aggregate $100 million bank line of credit. Management believes these sources will be sufficient to meet working capital needs and anticipated growth.