10-QPeriod: Q3 FY2021

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2021

Filed March 8, 2021For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its third quarter fiscal year 2021 results, showcasing resilience and strategic progress despite the ongoing challenges of the COVID-19 pandemic. The company demonstrated an increase in net income year-over-year, driven by strong fuel margins and an expanded store footprint. While total revenue saw a decline primarily due to lower fuel volumes and prices, the company effectively managed its cost of goods sold and operating expenses, leading to improved profitability metrics. Key strategic initiatives, including store expansion and the announced acquisition of Buchanan Energy, are positioning Casey's for future growth. The company also highlighted its ability to adapt to changing consumer behaviors and market conditions, with notable performance in grocery and other merchandise sales. Despite the uncertainties posed by the pandemic, Casey's maintains a strong liquidity position and a clear focus on operational efficiency and shareholder value.

Financial Highlights

43 data points
Beta

Revenue

$2.01B

Net Income

$38.63M

1.9% Net Margin

EPS (Diluted)

$1.04

Total Assets

$4.40B

Cash & Equivalents

$388.95M

Free Cash Flow

$6.86M

Financial Statements
Beta
Revenue$2.01B
Operating Expenses$414.45M
Interest Expense$11.47M
Net Income$38.63M
EPS (Basic)$1.04
EPS (Diluted)$1.04
Shares Outstanding (Basic)37.04M
Shares Outstanding (Diluted)37.28M

Key Highlights

  • 1Net income increased by 13.7% to $38.6 million for the third quarter of fiscal 2021 compared to the prior year, driven by higher fuel contributions and an expanded store base.
  • 2Revenue less cost of goods sold (excluding depreciation and amortization) improved to 26.9% of total revenue in Q3 FY2021 from 22.1% in Q3 FY2020, largely due to a significant increase in fuel margins.
  • 3The company announced an agreement to acquire Buchanan Energy for $580 million, signaling a significant step in its growth strategy, though the transaction is pending regulatory approval.
  • 4Total revenue decreased by 10.7% in the third quarter, primarily due to a 20.0% decline in retail fuel sales stemming from lower prices and gallons sold, influenced by the COVID-19 pandemic.
  • 5Grocery and other merchandise same-store sales increased by 5.4%, with notable strength in alcohol and packaged beverages, indicating resilient consumer demand in these categories.
  • 6Operating expenses increased by 9.8% in the quarter, influenced by the addition of 36 new stores, approximately $11 million in COVID-related expenses, and $10 million in incremental incentive compensation.
  • 7Casey's maintained a strong liquidity position, with cash and cash equivalents increasing significantly to $388.9 million as of January 31, 2021, and an improved current asset to current liability ratio of 1.28:1.

Frequently Asked Questions

The COVID-19 pandemic led to decreased store traffic and lower demand for certain products, particularly impacting fuel volumes and prepared food/fountain sales. However, the company also incurred increased operating expenses related to health and safety measures. Despite these challenges, Casey's saw an increase in net income due to higher fuel margins and a growing store count.

The acquisition of Buchanan Energy for $580 million is a key part of Casey's growth strategy. It aims to expand the company's reach and store portfolio, although the transaction is subject to customary closing conditions, including regulatory approval from the FTC.

Retail fuel sales decreased by 20.0% in the third quarter due to lower prices and a 9.5% decrease in gallons sold, influenced by softer demand. However, fuel margins significantly improved, with revenue per gallon less cost of goods sold increasing to 32.9 cents from 21.7 cents in the prior year, attributed to the company's centralized fuel team's ability to navigate the fuel marketplace effectively.

Casey's continues to expand its store base, adding 36 net new stores in the nine months ended January 31, 2021. The company also announced plans to complete approximately 40 new store constructions in the current fiscal year and is pursuing the acquisition of Buchanan Energy, which would add further stores to its portfolio.