10-QPeriod: Q3 FY2018

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2018

Filed March 7, 2018For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported strong performance for the nine months ended January 31, 2018, with total revenue increasing by 11.3% to $6.3 billion, driven by robust fuel sales and growth in grocery, merchandise, and prepared food categories. Net income saw a significant surge of 102.6% to $298.6 million, largely influenced by a one-time tax benefit resulting from the Tax Cuts and Jobs Act of 2017. The company actively invested in growth through new store construction, acquisitions, and remodels, with capital expenditures totaling $452.6 million for the nine-month period. Despite increased operating expenses and a slight decrease in EBITDA, the company's financial position remains solid, supported by strong operating cash flows and a substantial line of credit.

Financial Highlights

46 data points
Beta

Revenue

$2.05B

20.4% Gross Margin

Net Income

$192.97M

9.4% Net Margin

EPS (Diluted)

$5.08

Total Assets

$3.45B

Cash & Equivalents

$138.71M

Free Cash Flow

-$123.19M

Financial Statements
Beta
Revenue$2.05B
Cost of Revenue$1.63B
Gross Profit$419.92M
Operating Expenses$323.04M
Interest Expense$13.47M
Net Income$192.97M
EPS (Basic)$5.13
EPS (Diluted)$5.08
Shares Outstanding (Basic)37.58M
Shares Outstanding (Diluted)37.95M

Key Highlights

  • 1Total revenue for the nine months ended January 31, 2018, increased by 11.3% to $6.3 billion compared to the prior year.
  • 2Net income for the nine months surged by 102.6% to $298.6 million, significantly impacted by a $167 million one-time tax benefit from the Tax Cuts and Jobs Act.
  • 3Capital expenditures were substantial at $452.6 million for the nine-month period, primarily for new store construction, remodels, and acquisitions, indicating a strong focus on expansion.
  • 4Operating expenses increased by 9.9% for the nine months, attributed to store expansion and growth programs, though store-level operating expenses for existing stores showed improvement compared to the prior year.
  • 5The company repurchased $144.1 million of its common stock during the nine-month period, alongside other financing activities including new debt issuances.
  • 6Long-term debt increased significantly to $1.3 billion due to new senior note issuances to fund capital expenditures and growth initiatives.
  • 7Despite a slight decrease in EBITDA (down 1.2% year-over-year for the nine months), the company maintains a strong liquidity position with significant cash reserves and an operating line of credit.

Frequently Asked Questions

The substantial increase in net income was primarily driven by a one-time tax benefit of $167 million recognized in December 2017, resulting from the remeasurement of deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act. This act also led to a reduction in the corporate income tax rate.

Casey's is heavily investing in growth through a multi-faceted approach. This includes opening new stores, completing replacement stores, undertaking major remodels, and acquiring existing stores. For the nine months ended January 31, 2018, capital expenditures reached $452.6 million, reflecting these expansion efforts, with a significant pipeline of new builds and acquisitions underway.

The company's liquidity is primarily sourced from cash provided by operations. As of January 31, 2018, Casey's had $138.7 million in cash and cash equivalents and a $100,000 line of credit with no outstanding balance. While long-term debt increased to approximately $1.3 billion due to recent senior note issuances to fund capital expenditures, the company anticipates these resources, combined with future cash flow, will be sufficient to meet its working capital and growth needs.

Total revenue increased by 11.3% to $6.3 billion. Fuel sales saw a significant increase of 15.4%, driven by both higher prices and increased gallons sold. Grocery and other merchandise sales grew by 5.4%, and prepared food and fountain sales increased by 6.1%, indicating continued strength across all core business categories.