10-QPeriod: Q2 FY2021

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2020

Filed December 7, 2020For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported a strong financial performance for the second quarter and first half of fiscal year 2021, ending October 31, 2020. Despite a challenging operating environment influenced by the COVID-19 pandemic, which led to decreased store traffic and lower fuel gallon sales, the company demonstrated resilience and growth. This was primarily driven by a significant increase in fuel margins, strong performance in grocery and merchandise sales, and the expansion of its store footprint through new acquisitions and construction. The company's net income saw a substantial increase, reflecting improved profitability per fuel gallon and benefits from operational efficiencies and strategic pricing. While prepared food and fountain sales experienced a slight decline, overall revenue, when adjusted for fuel volume, showed positive trends in other segments. Casey's also strategically managed its debt, refinancing senior notes to lower interest rates, and maintained a solid liquidity position, bolstered by a significant increase in cash and cash equivalents from operating activities. The report also highlights a major pending acquisition of Buchanan Energy, expected to close by year-end 2020, which will further expand the company's retail presence.

Financial Highlights

43 data points
Beta

Revenue

$2.22B

Net Income

$111.98M

5.1% Net Margin

EPS (Diluted)

$3.00

Total Assets

$4.32B

Cash & Equivalents

$404.69M

Free Cash Flow

$86.24M

Financial Statements
Beta
Revenue$2.22B
Operating Expenses$410.35M
Interest Expense$10.63M
Net Income$111.98M
EPS (Basic)$3.02
EPS (Diluted)$3.00
Shares Outstanding (Basic)37.03M
Shares Outstanding (Diluted)37.28M

Key Highlights

  • 1Net income increased by 36.6% to $111.98 million for the three months ended October 31, 2020, compared to the prior year.
  • 2Revenue less cost of goods sold (excluding depreciation and amortization) improved significantly, reaching 28.5% of revenue for the quarter, up from 22.4% in the prior year, largely driven by higher fuel margins.
  • 3Same-store sales in grocery and other merchandise increased by 6.6%, while prepared food and fountain sales saw a decrease of 3.6% for the quarter.
  • 4The company's cash and cash equivalents significantly increased to $404.68 million as of October 31, 2020, up from $78.27 million at April 30, 2020, driven by strong operating cash flows.
  • 5Casey's entered into an agreement to acquire Buchanan Energy for $580 million, adding 94 retail stores and 79 dealer locations, expected to close by December 31, 2020.
  • 6Operating expenses increased by 9.9% for the quarter, mainly due to operating more stores and incurring COVID-related expenses and higher incentive compensation costs.
  • 7The company reported a 5.9% decrease in fuel gallons sold for the quarter, but a 16.2% decrease in average retail fuel price.

Frequently Asked Questions

The COVID-19 pandemic led to decreased store traffic and softer demand for fuel, resulting in a 5.9% decrease in same-store fuel gallons sold for the quarter. However, the company benefited from significantly higher fuel margins and continued strength in grocery and merchandise sales. Despite the challenges, Casey's demonstrated resilience, with net income increasing by 36.6% due to improved fuel profitability and strategic operational management.

The acquisition of Buchanan Energy for $580 million, expected to close by December 31, 2020, is a major strategic move for Casey's. It will significantly expand the company's footprint by adding 94 retail stores and 79 dealer locations, primarily in Nebraska. This acquisition is expected to drive future growth and market share in the convenience store sector.

Casey's has managed its debt effectively, notably refinancing senior notes to lower interest rates. The company's liquidity position is strong, with cash and cash equivalents surging to $404.68 million from $78.27 million at the previous fiscal year-end. This increase is attributed to robust cash flow from operations. The company also has access to a $300 million revolving credit facility and a $25,000 bank line, providing ample financial flexibility.

The substantial increase in net income was primarily driven by a significant improvement in fuel margins, which rose to 35.3 cents per gallon from 22.9 cents in the prior year's quarter. Additionally, the company benefited from operating 38 more stores compared to the previous year, contributing to increased sales volumes in grocery and merchandise. The strategic refinancing of debt also played a role in reducing interest expenses.