10-QPeriod: Q3 FY2019

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2019

Filed March 11, 2019For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its third quarter fiscal year 2019 results for the period ending January 31, 2019. While total revenue saw a slight decrease of 0.3% year-over-year to $2.05 billion, this was primarily driven by a planned decrease in fuel gallons sold as the company focused on optimizing fuel margins. This strategy, coupled with strong performance in grocery and prepared foods, led to an increase in revenue less cost of goods sold (gross profit) of 10.1% for the quarter. Net income for the quarter significantly decreased by 78.3% to $41.8 million, largely due to a favorable one-time tax benefit recognized in the prior year related to the Tax Cuts and Jobs Act. Excluding this prior year impact, the company demonstrated improved operating performance with a 32.9% increase in EBITDA. The company continues to invest in growth, expanding its store count and focusing on operational efficiencies, such as labor management, which helped moderate operating expense growth.

Financial Highlights

46 data points
Beta

Revenue

$2.05B

23.0% Gross Margin

Net Income

$41.84M

2.0% Net Margin

EPS (Diluted)

$1.13

Total Assets

$3.58B

Cash & Equivalents

$34.17M

Free Cash Flow

-$39.29M

Financial Statements
Beta
Revenue$2.05B
Cost of Revenue$1.58B
Gross Profit$470.26M
Operating Expenses$341.54M
Interest Expense$13.31M
Net Income$41.84M
EPS (Basic)$1.14
EPS (Diluted)$1.13
Shares Outstanding (Basic)36.72M
Shares Outstanding (Diluted)37.01M

Key Highlights

  • 1Total revenue for the third quarter decreased slightly by 0.3% to $2.05 billion, attributed to a strategic reduction in fuel gallons sold to improve margins.
  • 2Revenue less cost of goods sold (gross profit) increased by 10.1% year-over-year, driven by higher fuel margins and growth in grocery and prepared food categories.
  • 3Net income significantly decreased by 78.3% to $41.8 million, primarily due to a large tax benefit recorded in the prior year's comparable period.
  • 4EBITDA increased by 32.9% to $128.7 million for the quarter, indicating improved underlying operational profitability.
  • 5The company expanded its store footprint, ending the quarter with 2,123 stores, an increase of 50 stores since the prior fiscal year's end.
  • 6Operating expenses increased by 5.7%, largely due to the operation of more stores; however, same-store operating expenses excluding credit card fees decreased by 2.1%.
  • 7Casey's has a robust growth pipeline with 17 acquisition stores under agreement and a new store pipeline of 133 sites.

Frequently Asked Questions

The substantial decrease in net income for the quarter ended January 31, 2019, was primarily due to a one-time, favorable tax benefit recognized in the prior year's comparable period related to the adoption of the Tax Cuts and Jobs Act. When comparing operating performance, excluding this tax impact, the company's results show significant improvement.

Casey's has adopted a more proactive and balanced strategy to optimize fuel pricing, which has led to higher fuel margins (22.1 cents per gallon in Q3 FY19 vs. 18.6 cents in Q3 FY18). This strategy contributed to a decrease in fuel gallons sold, which is a planned outcome to enhance overall profitability within the fuel segment.

Operating expenses increased by 5.7% primarily because Casey's is operating 103 more stores compared to the same period last year. However, the company has implemented initiatives, such as enhancements to store labor management, which resulted in a 2.1% decrease in same-store operating expenses (excluding credit card fees) for the quarter, demonstrating a focus on operational efficiency.

Casey's General Stores is actively pursuing growth. As of January 31, 2019, the company had 17 acquisition stores under agreement and a pipeline for 133 new store sites, with 48 of those already under construction. This indicates a strong commitment to expanding its store count and market presence.