10-QPeriod: Q2 FY2022

CASEYS GENERAL STORES INC Quarterly Report for Q2 Ended Oct 31, 2021

Filed December 7, 2021For Securities:CASY

Summary

Casey's General Stores, Inc. (CASY) reported its financial results for the second quarter of fiscal year 2022, ending October 31, 2021. The company demonstrated significant revenue growth driven by acquisitions and increased same-store sales, particularly in fuel and grocery/general merchandise categories. Despite a year-over-year decrease in net income, largely due to increased operating expenses and depreciation from expanded store count and wage pressures, the company's strategic acquisitions and focus on core product offerings position it for continued growth. Key operational highlights include a substantial increase in total revenue, a notable rise in same-store gallons sold for fuel, and continued momentum in prepared food and dispensed beverages, especially pizza. The company successfully integrated the Buchanan Energy and Circle K acquisitions, adding a significant number of stores and expanding its operational footprint. While facing challenges such as inflationary pressures and labor cost increases, Casey's maintains a strong balance sheet and believes it is well-positioned to navigate economic uncertainties and pursue its long-term strategic objectives.

Financial Highlights

43 data points
Beta

Revenue

$3.26B

Net Income

$96.83M

3.0% Net Margin

EPS (Diluted)

$2.59

Total Assets

$5.25B

Cash & Equivalents

$311.70M

Free Cash Flow

$135.34M

Financial Statements
Beta
Revenue$3.26B
Operating Expenses$500.64M
Interest Expense$13.52M
Net Income$96.83M
EPS (Basic)$2.61
EPS (Diluted)$2.59
Shares Outstanding (Basic)37.16M
Shares Outstanding (Diluted)37.37M

Key Highlights

  • 1Total revenue surged by 47.3% to $3.26 billion for the quarter, driven by a 76.2% increase in fuel sales and a 14.8% rise in grocery and general merchandise sales.
  • 2Net income for the quarter decreased by 13.5% to $96.8 million, or $2.59 per diluted share, compared to $111.9 million ($3.00 per diluted share) in the prior year, primarily due to higher operating expenses and depreciation.
  • 3The company completed the integration of Buchanan Energy (92 stores) and Circle K (48 stores) acquisitions, significantly expanding its store base to 2,380 locations.
  • 4Same-store sales for grocery and general merchandise increased by 6.8%, and prepared food and dispensed beverage sales increased by 4.1% in the second quarter.
  • 5Revenue less cost of goods sold as a percentage of revenue decreased to 22.0% from 28.5% in the prior year, impacted by lower fuel margins.
  • 6Operating expenses increased by 22.0% due to operating more stores, higher wage rates, and increased credit card fees.
  • 7The company ended the quarter with $311.7 million in cash and cash equivalents, though its current ratio slightly decreased to 0.99 due to acquisition-related payments and increased inventory.

Frequently Asked Questions

The significant increase in total revenue was primarily driven by the acquisition of Buchanan Energy and Circle K stores, which added a substantial number of locations, and an increase in same-store sales for fuel and grocery/general merchandise, along with higher average fuel prices.

Net income decreased primarily due to a significant increase in operating expenses and depreciation and amortization. These higher costs are attributed to operating a larger number of stores post-acquisitions, increased wage rates, higher credit card fees due to increased fuel pricing, and integration costs associated with recent acquisitions.

The acquisitions of Buchanan Energy and Circle K have substantially increased Casey's store count, expanding its geographical reach and revenue base. While these acquisitions contributed significantly to revenue growth, they also led to higher operating expenses, depreciation, and integration-related costs, impacting net income in the short term.

Same-store sales showed positive growth, particularly in grocery and general merchandise (up 6.8%) and prepared food and dispensed beverages (up 4.1%). However, prepared food and dispensed beverage sales were adversely impacted by supply chain challenges, specifically in bakery and dispensed beverages, though the company implemented selective price increases to mitigate inflationary pressures.