10-QPeriod: Q1 FY2020

CASEYS GENERAL STORES INC Quarterly Report for Q1 Ended Jul 31, 2019

Filed September 9, 2019For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its first quarter fiscal year 2020 results for the period ending July 31, 2019. The company demonstrated a strong increase in net income, up 22.2% year-over-year to $85.8 million, driven by robust fuel margins and controlled operating expense growth. This performance was also supported by an expanded store count, with 76 more stores in operation compared to the prior year. Despite a slight decrease in same-store fuel gallons sold, Casey's managed to improve its overall fuel profitability through a more proactive pricing strategy, resulting in higher fuel margins per gallon. Growth in grocery and merchandise, as well as prepared food and fountain sales, also contributed positively. The company continues to invest significantly in its store base, with substantial capital expenditures planned for store construction, acquisition, and remodeling, indicating a commitment to future growth.

Financial Highlights

45 data points
Beta

Revenue

$2.63B

21.5% Gross Margin

Net Income

$85.81M

3.3% Net Margin

EPS (Diluted)

$2.31

Total Assets

$3.84B

Cash & Equivalents

$96.73M

Free Cash Flow

$77.36M

Financial Statements
Beta
Revenue$2.63B
Cost of Revenue$2.06B
Gross Profit$565.69M
Operating Expenses$379.84M
Interest Expense$13.72M
Net Income$85.81M
EPS (Basic)$2.33
EPS (Diluted)$2.31
Shares Outstanding (Basic)36.86M
Shares Outstanding (Diluted)37.09M

Key Highlights

  • 1Net income increased by 22.2% to $85.8 million for the three months ended July 31, 2019, compared to $70.2 million in the prior year.
  • 2Total revenue saw a modest increase of 1.5% to $2.63 billion, driven by growth in merchandise and prepared food categories, offsetting a slight decline in fuel revenue.
  • 3Same-store sales for grocery and other merchandise increased by 3.2%, and prepared food and fountain increased by 1.6%.
  • 4Fuel margins improved significantly, with revenue less cost of goods sold per gallon (exclusive of D&A) at 24.4 cents, up from 20.5 cents in the prior year, although same-store fuel gallons sold decreased by 2.0%.
  • 5Operating expenses increased by 5.7%, largely due to operating 76 additional stores.
  • 6The company generated $178.8 million in net cash from operating activities, a 19.1% increase year-over-year.
  • 7Capital expenditures were $106.3 million for the quarter, with a planned full-year expenditure of $516 million focused on growth initiatives.

Frequently Asked Questions

Casey's General Stores reported a significant increase in net income of 22.2% to $85.8 million for the first quarter of fiscal 2020 compared to the same period last year. While total revenue saw a modest 1.5% increase, this was driven by strong performance in grocery, merchandise, and prepared food categories, which helped offset a slight decline in fuel revenue. Key drivers for the improved net income include higher fuel margins and disciplined operating expense growth despite an expanding store footprint.

Casey's has adopted a more proactive and balanced approach to fuel pricing optimization, aiming to grow profitability. This strategy has resulted in higher fuel margins per gallon (24.4 cents in Q1 FY2020 vs. 20.5 cents in Q1 FY2019). While this has led to a decrease in same-store fuel gallons sold (down 2.0%), the overall profitability from fuel sales has improved. The company notes that softer demand in the Midwest also impacted fuel gallon sales.

Casey's is making substantial investments to fuel future growth. The company plans to spend $516 million in fiscal 2020, primarily on the construction, acquisition, and remodeling of stores. This investment is supported by existing cash, operational cash flow, and recent debt issuance. As of July 31, 2019, Casey's had 107 new store sites in its pipeline, with 35 already under construction, indicating a strong commitment to expanding its store base.

As of July 31, 2019, Casey's had approximately $1.3 billion in long-term debt. The company maintains a $300 million revolving credit facility and a $25,000 bank line of credit. The company's liquidity appears sufficient, with cash and cash equivalents of $96.7 million and strong cash flow from operations, which management believes will adequately cover working capital needs and anticipated growth expenditures.