10-QPeriod: Q2 FY2015

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2014

Filed December 10, 2014For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its third-quarter results for the fiscal year ending October 31, 2014. The company demonstrated robust top-line growth, with total revenue increasing by 6.7% to $2.15 billion for the quarter compared to the prior year. This growth was primarily driven by a 3.8% increase in retail fuel sales, supported by an 8.7% rise in gallons sold, and a significant 12.1% increase in grocery and general merchandise sales. Prepared food and fountain sales also showed strong performance with an 17.1% increase. The company experienced an improved gross profit margin of 17.3% for the quarter, up from 15.8% in the prior year, largely due to a favorable fuel margin environment. However, operating expenses rose by 13.0%, attributed to the addition of new stores and expanded operating initiatives. Despite increased expenses, net income saw a substantial increase of 26.5% to $49.9 million, or $1.28 per diluted share, reflecting the positive impact of higher revenues and improved fuel margins.

Financial Highlights

43 data points
Beta

Revenue

$2.15B

17.3% Gross Margin

Net Income

$49.87M

2.3% Net Margin

EPS (Diluted)

$1.28

Total Assets

$2.40B

Cash & Equivalents

$71.55M

Free Cash Flow

-$39.86M

Financial Statements
Beta
Revenue$2.15B
Cost of Revenue$1.78B
Gross Profit$371.28M
Operating Expenses$244.78M
Interest Expense$10.36M
Net Income$49.87M
EPS (Basic)$1.29
EPS (Diluted)$1.28
Shares Outstanding (Basic)38.71M
Shares Outstanding (Diluted)39.06M

Key Highlights

  • 1Total revenue increased by 6.7% year-over-year to $2.15 billion for the third quarter.
  • 2Same-store fuel gallons sold increased by 8.7%, with a favorable average margin of 19.5 cents per gallon.
  • 3Grocery and other merchandise same-store sales grew by 6.6%, and prepared foods and fountain sales increased by 11.1%.
  • 4Gross profit margin improved to 17.3% from 15.8% in the prior year, driven by higher fuel margins.
  • 5Net income rose by 26.5% to $49.9 million, with diluted earnings per share increasing to $1.28 from $1.01.
  • 6The company continues its expansion strategy, opening 21 new stores and acquiring 29 stores during the first six months of the fiscal year.
  • 7A material weakness in internal controls related to the review and approval of federal excise tax returns was identified and is being remediated.

Frequently Asked Questions

Revenue growth was primarily driven by increases in retail fuel sales, with a higher volume of gallons sold and improved margins, as well as strong same-store sales growth in grocery and general merchandise, and prepared foods and fountain categories. The expansion of the store base through new constructions and acquisitions also contributed significantly.

Gross profit margin improved to 17.3% for the quarter, largely due to a more favorable fuel margin environment. The margin on fuel sales increased to 6.1% from 4.8% in the prior year. However, the prepared food margin decreased to 59.3% from 61.8%, attributed to higher input costs for cheese, meat, and supplies.

Casey's General Stores is focused on a multi-pronged growth strategy that includes building new stores, replacing existing locations, and acquiring other stores. During the first six months of the fiscal year, the company completed 21 new-store constructions and acquired 29 stores, aligning with its goal to build or acquire between 72 and 108 stores annually.

The company identified a material weakness in its internal control over financial reporting related to the review and approval of federal excise tax returns. While this did not result in material misstatements to past financial statements, the company is implementing a remediation plan to address this deficiency, which includes enhancing IT solutions and formalizing review processes within the Tax Department.