10-QPeriod: Q2 FY2018

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2017

Filed December 11, 2017For Securities:CASY

Summary

Caseys General Stores, Inc. (CASY) reported its third quarter fiscal year 2018 results, showcasing revenue growth driven by increased fuel sales and a modest rise in prepared food and fountain sales. While total revenue saw a significant increase, net income for the quarter and year-to-date declined compared to the prior year. This decline is attributed to higher operating expenses, increased depreciation, and an elevated effective tax rate, partially offset by improved fuel margins and gallon sales. The company continues its strategic expansion through new store constructions, acquisitions, and major remodels. Significant investments in property and equipment highlight the ongoing commitment to growth and operational efficiency. Management believes current liquidity and cash flow from operations are sufficient to meet working capital needs, supported by an existing credit line and future financing activities. Investors should note the company's ongoing efforts to manage costs and the potential impact of competitive pressures and fuel market volatility.

Financial Highlights

46 data points
Beta

Revenue

$2.15B

21.7% Gross Margin

Net Income

$48.92M

2.3% Net Margin

EPS (Diluted)

$1.28

Total Assets

$3.42B

Cash & Equivalents

$285.19M

Free Cash Flow

-$32.83M

Financial Statements
Beta
Revenue$2.15B
Cost of Revenue$1.69B
Gross Profit$467.66M
Operating Expenses$322.95M
Interest Expense$12.98M
Net Income$48.92M
EPS (Basic)$1.29
EPS (Diluted)$1.28
Shares Outstanding (Basic)37.80M
Shares Outstanding (Diluted)38.18M

Key Highlights

  • 1Total revenue increased by 12.2% to $2,153,745 thousand for the three months ended October 31, 2017, and by 9.2% to $4,247,484 thousand for the six months ended October 31, 2017, primarily driven by higher fuel sales volumes and prices.
  • 2Net income for the three months ended October 31, 2017, decreased by 14.4% to $48,918 thousand, and for the six months ended October 31, 2017, decreased by 15.2% to $105,676 thousand, compared to the prior year periods.
  • 3Operating expenses increased by 9.4% for the quarter and 9.7% for the six months, attributed to the operation of more stores, rollout of growth programs, and wage rate increases.
  • 4Depreciation and amortization expense rose by 11.3% for the quarter and 12.7% for the six months, reflecting increased capital expenditures.
  • 5The effective tax rate increased to 36.9% for the quarter and 37.6% for the six months, impacting net income, influenced by factors including Illinois's corporate tax rate increase.
  • 6Capital expenditures were significant, with $271,578 thousand spent in the first six months of fiscal 2018 for store construction, acquisition, and remodeling, with anticipated expenditures of $500,000 to $600,000 for the full fiscal year.
  • 7The company repurchased approximately $510,193 shares of common stock for $55,350 thousand during the quarter ended October 31, 2017, under an authorized $300 million repurchase program.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in retail fuel sales, which saw a 17.3% rise due to a 11.0% increase in average retail price per gallon and a 5.7% increase in gallons sold. Grocery and other merchandise sales increased by 5.0%, and prepared food and fountain sales grew by 5.5%.

Net income decreased due to a combination of factors including a 9.4% increase in operating expenses, a 11.3% rise in depreciation and amortization, and an increase in the effective tax rate. These increases outweighed the positive impact of higher fuel margins and increased fuel gallon sales.

Casey's General Stores is actively investing in growth through new store constructions, replacement stores, major remodels, and acquisitions. In the first six months of fiscal 2018, they opened 12 new stores, completed 14 replacement stores, undertook 28 major remodels, and acquired 14 additional stores. Significant capital expenditures are planned for the full fiscal year, focusing on these expansion initiatives.

Management believes that the company's current aggregate $100,000 bank line of credit, combined with cash and cash equivalents and anticipated future cash flow from operations, will be sufficient to meet its working capital needs. Capital expenditures are being funded through operations, existing cash, and recent senior note issuances.