10-Q/APeriod: Q1 FY2015

CASEYS GENERAL STORES INC Quarterly Report (Amendment) for Q1 Ended Jul 31, 2014

Filed December 10, 2014For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) filed an amended quarterly report (Form 10-Q/A) for the fiscal quarter ended July 31, 2014, which included revisions to previously reported financial data due to the correction of immaterial errors related to excise taxes. Financially, the company reported a decrease in net income for the quarter compared to the prior year, largely due to lower renewable fuel credits and higher input costs for prepared foods, despite an increase in store count and same-store sales. The company continued its aggressive growth strategy, with significant investments in new store construction and acquisitions. Management highlighted that while revenue and same-store sales in key categories like grocery and prepared foods showed positive growth, gross margins faced pressure, particularly in fuel due to lower renewable fuel credits and in groceries due to margin pressure on cigarettes. The company also disclosed a material weakness in its internal controls related to the review and approval of federal excise tax returns, with remediation plans in place.

Financial Highlights

43 data points
Beta

Revenue

$2.29B

16.2% Gross Margin

Net Income

$50.10M

2.2% Net Margin

EPS (Diluted)

$1.28

Total Assets

$2.39B

Cash & Equivalents

$71.55M

Free Cash Flow

$27.57M

Financial Statements
Beta
Revenue$2.29B
Cost of Revenue$1.92B
Gross Profit$370.91M
Operating Expenses$244.32M
Interest Expense$10.51M
Net Income$50.10M
EPS (Basic)$1.30
EPS (Diluted)$1.28
Shares Outstanding (Basic)38.62M
Shares Outstanding (Diluted)39.01M

Key Highlights

  • 1Net income for the three months ended July 31, 2014, decreased to $50.1 million ($1.28 per diluted share) from $53.8 million ($1.39 per diluted share) in the prior year's comparable period.
  • 2Total revenue increased by 8.3% to $2.29 billion, driven by growth in fuel, grocery & other merchandise, and prepared food & fountain sales.
  • 3Same-store sales increased by 7.7% for grocery and other merchandise and 11.1% for prepared foods and fountain.
  • 4The company acquired 25 stores and completed seven new-store constructions during the quarter, continuing its expansion strategy.
  • 5Gross profit margin for fuel sales decreased to 5.5% from 6.0% year-over-year, impacted by lower renewable fuel credits.
  • 6Operating expenses increased by 13.1%, largely due to an increase in store count and expansion of operating initiatives.
  • 7A material weakness in internal control over financial reporting was identified related to the review and approval of federal excise tax returns, with remediation plans underway.

Frequently Asked Questions

The amendment was filed to correct immaterial errors identified through a routine IRS examination related to excise taxes owed on ethanol gallon purchases. These corrections impacted accrued expenses, cost of goods sold, and income taxes, leading to revisions in reported net income, earnings per share, and balance sheet items.

Total revenue increased by 8.3% to $2.29 billion. However, net income decreased by 6.9% to $50.1 million compared to the same period last year. This decrease was primarily attributed to a reduction in renewable fuel credits sold and higher input costs in the prepared food category, despite overall sales growth and an increase in store count.

Casey's General Stores is actively pursuing growth through store expansion. During the quarter, the company acquired 25 stores and built seven new ones. This expansion is reflected in increased total revenue and operating expenses, as more stores contribute to sales but also incur operational costs. Capital expenditures also remain high to support this growth.

A material weakness was identified concerning the review and approval of federal excise tax returns, which led to the restatement of certain financial figures. While the errors were deemed immaterial to the previously issued financial statements, the control deficiency itself represents a risk. The company is implementing remediation plans to strengthen these controls and prevent future misstatements. Investors should monitor the effectiveness of these remediation efforts.