10-QPeriod: Q2 FY2019

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2018

Filed December 10, 2018For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported strong performance in its fiscal second quarter ended October 31, 2018. Total revenue saw a significant increase of 17.8% year-over-year, driven by a substantial rise in fuel sales due to higher average retail prices and increased gallons sold. Same-store sales also showed positive growth in grocery and prepared food categories, indicating continued customer demand for core offerings. Profitability benefited from increased gross profit dollars across all segments, coupled with disciplined operating expense management. Notably, the effective tax rate saw a considerable reduction due to the Tax Cuts and Jobs Act of 2017, which substantially boosted net income. The company continues to invest in growth through new store construction and acquisitions, with a substantial capital expenditure budget for fiscal 2019.

Financial Highlights

46 data points
Beta

Revenue

$2.54B

20.1% Gross Margin

Net Income

$66.61M

2.6% Net Margin

EPS (Diluted)

$1.80

Total Assets

$3.55B

Cash & Equivalents

$51.89M

Free Cash Flow

$53.30M

Financial Statements
Beta
Revenue$2.54B
Cost of Revenue$2.03B
Gross Profit$510.32M
Operating Expenses$344.19M
Interest Expense$14.19M
Net Income$66.61M
EPS (Basic)$1.82
EPS (Diluted)$1.80
Shares Outstanding (Basic)36.70M
Shares Outstanding (Diluted)37.02M

Key Highlights

  • 1Total revenue increased by 17.8% to $2.54 billion for the second quarter of fiscal 2019 compared to the prior year.
  • 2Net income saw a significant increase of 36.2% to $66.6 million for the second quarter.
  • 3Diluted earnings per share rose to $1.80 from $1.28 in the prior year's second quarter.
  • 4Same-store sales for grocery and other merchandise increased by 2.7%, and prepared food and fountain increased by 2.2%.
  • 5The effective tax rate decreased from 36.9% to 26.5% due to the Tax Cuts and Jobs Act of 2017.
  • 6Operating expenses increased by 6.6%, primarily due to operating 94 more stores compared to the prior year.
  • 7Capital expenditures for the six months ended October 31, 2018, were $200.999 million, reflecting investments in store growth and modernization.

Frequently Asked Questions

The substantial increase in total revenue was primarily driven by a 24.2% rise in retail fuel sales. This was due to a 17.5% increase in the average retail price per gallon and a 5.7% increase in the number of gallons sold. Additionally, sales of grocery and other merchandise, as well as prepared food and fountain, also contributed positively.

The Tax Cuts and Jobs Act of 2017 significantly reduced Casey's effective tax rate from 36.9% in the prior year's second quarter to 26.5% in the current year's second quarter. This lower tax rate was a primary contributor to the substantial increase in net income.

Casey's continues to focus on growth through expanding its store network. This includes new store construction, acquisitions, and reinvesting in existing stores. For fiscal year 2019, the company has budgeted $466 million for construction, acquisition, and remodeling of stores.

Key risks include intense competition in both fuel and convenience store product sales, volatility in fuel prices and supply, potential adverse effects from regulations and taxes on tobacco products, and the successful implementation of their new enterprise resource planning (ERP) system, which could lead to costs or disruptions if not managed effectively.