10-QPeriod: Q1 FY2016

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2015

Filed September 8, 2015For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its results for the fiscal quarter ended July 31, 2015, showcasing a solid increase in net income driven by strong same-store sales growth in its grocery and prepared food categories, alongside improved fuel margins. Total revenue experienced a year-over-year decrease primarily due to lower fuel prices, though the company saw an increase in fuel gallons sold. Significant investments in new store construction, replacements, and remodels continue to be a key focus for growth. The company's financial position remains robust, with substantial property and equipment assets reflecting its ongoing expansion strategy. While operating expenses increased, this was largely attributed to the expansion of store count and operational initiatives, partially offset by lower credit card fees and transportation costs. Casey's management remains confident in its liquidity and capital resources to support future operations and growth.

Financial Highlights

44 data points
Beta

Revenue

$2.05B

20.1% Gross Margin

Net Income

$61.81M

3.0% Net Margin

EPS (Diluted)

$1.57

Total Assets

$2.55B

Cash & Equivalents

$46.60M

Free Cash Flow

$5.22M

Financial Statements
Beta
Revenue$2.05B
Cost of Revenue$1.64B
Gross Profit$411.24M
Operating Expenses$263.58M
Interest Expense$10.08M
Net Income$61.81M
EPS (Basic)$1.59
EPS (Diluted)$1.57
Shares Outstanding (Basic)38.96M
Shares Outstanding (Diluted)39.39M

Key Highlights

  • 1Net income increased by 23.4% to $61.8 million compared to the prior year's quarter.
  • 2Diluted earnings per common share rose to $1.57 from $1.28 in the same period last year.
  • 3Same-store sales increased by 7.0% for grocery and other merchandise and 10.3% for prepared food and fountain.
  • 4Fuel gallons sold increased by 8.0%, despite a 25.9% decrease in the average retail fuel price per gallon.
  • 5Total gross profit margin improved to 20.1% from 16.2% year-over-year, driven by better fuel and prepared food margins.
  • 6Capital expenditures for property and equipment were $100.1 million, primarily for store construction, remodeling, and acquisitions.
  • 7The company operated 1,887 stores as of July 31, 2015, with plans for continued expansion.

Frequently Asked Questions

Net income increased significantly due to a combination of higher same-store sales in grocery and prepared food categories, improved gross profit margins in these segments, and a more favorable fuel margin environment compared to the prior year. These factors, along with diligent cost containment, more than offset the revenue decrease stemming from lower fuel prices.

Casey's is actively investing in growth through capital expenditures, with $100.1 million spent in the quarter primarily on new store construction, replacements, and remodels. The company has a stated goal of building or acquiring 75 to 113 stores annually, alongside completing numerous store remodels, reflecting a strong commitment to expanding its store footprint and enhancing its existing locations.

Key risks highlighted include intense competition in the convenience store and fuel markets, volatility in wholesale fuel costs and prices impacting fuel margins and sales volume, potential adverse effects from tobacco product regulations and tax increases, and ongoing environmental compliance costs related to underground storage tanks. The company also faces risks related to its growth strategy, including the sufficiency of its capital resources and the successful integration of new and remodeled stores.

Casey's General Stores expresses confidence in its ability to fund operations and growth through cash generated from operations, its existing bank credit line, and potentially additional long-term debt. The company's strategy of investing in new and remodeled stores, coupled with strong performance in its core merchandise and prepared food offerings, positions it for continued expansion and financial stability.