10-QPeriod: Q3 FY2022

CASEYS GENERAL STORES INC Quarterly Report for Q3 Ended Jan 31, 2022

Filed March 8, 2022For Securities:CASY

Summary

Casey's General Stores Inc. (CASY) reported solid performance for the third quarter of fiscal year 2022, ending January 31, 2022. The company demonstrated significant revenue growth, driven by a substantial increase in fuel sales due to higher prices and volumes, along with strong same-store sales growth in grocery and general merchandise, and prepared food & dispensed beverages. This top-line expansion, coupled with strategic acquisitions, contributed to a healthy increase in net income compared to the prior year's quarter. The company continues to execute on its growth strategy, notably through significant acquisitions that have expanded its store footprint. While these acquisitions have led to increased operating expenses and debt, management believes its liquidity remains sufficient, supported by operating cash flows and existing credit facilities. Investors should note the impact of acquisitions on the balance sheet and the company's ongoing efforts to integrate these new locations and realize potential synergies.

Financial Highlights

43 data points
Beta

Revenue

$3.05B

Net Income

$64.02M

2.1% Net Margin

EPS (Diluted)

$1.71

Total Assets

$5.40B

Cash & Equivalents

$186.92M

Free Cash Flow

-$23.53M

Financial Statements
Beta
Revenue$3.05B
Operating Expenses$491.00M
Interest Expense$14.43M
Net Income$64.02M
EPS (Basic)$1.72
EPS (Diluted)$1.71
Shares Outstanding (Basic)37.17M
Shares Outstanding (Diluted)37.37M

Key Highlights

  • 1Total revenue increased by 51.8% year-over-year for the third quarter, reaching $3.05 billion, primarily driven by a 77.3% surge in fuel sales.
  • 2Same-store sales showed positive momentum, with grocery and general merchandise up 7.7% and prepared food & dispensed beverages up 7.4% in the third quarter.
  • 3Net income for the third quarter increased by 65.7% to $64.0 million, or $1.71 per diluted share, compared to $38.6 million, or $1.04 per diluted share, in the prior year.
  • 4The company completed significant acquisitions, adding 191 stores during the fiscal year, including Buchanan Energy (92 stores), Circle K (48 stores), and Pilot Corporation (40 stores), expanding its total store count to 2,431.
  • 5Operating expenses increased by 18.5% due to the expanded store count, higher wage rates, and increased credit card fees, while depreciation and amortization rose by 15.9%.
  • 6Long-term debt significantly increased to $1.86 billion from $1.39 billion, largely due to funding for acquisitions. Consequently, the current ratio decreased to 0.84:1 from 1.18:1.
  • 7The company repurchased no shares during the quarter but announced an extension and expansion of its share repurchase program to $400 million.

Frequently Asked Questions

Revenue growth was primarily driven by a substantial increase in retail fuel sales, up 77.3%, due to both higher average retail prices per gallon and a 19.9% increase in gallons sold. Additionally, same-store sales for grocery and general merchandise increased by 7.7%, and prepared food & dispensed beverages increased by 7.4%, demonstrating continued strength in core product categories.

The company made significant acquisitions during the period, adding 191 stores and expanding its total count to 2,431. This expansion led to a substantial increase in total assets, particularly goodwill and property and equipment. Long-term debt also rose significantly to fund these acquisitions. While driving revenue growth, these acquisitions have also contributed to higher operating expenses and a decrease in the current ratio due to increased liabilities and a reduction in cash and cash equivalents used for acquisitions.

While revenue has grown robustly, operating expenses increased by 18.5% primarily due to the larger store count, higher wage rates, and increased credit card fees. Depreciation and amortization also rose. Despite these cost increases, the company reported a 65.7% increase in net income for the quarter, indicating effective management of margins on fuel and merchandise, and the benefits of scale from recent acquisitions. Management believes its liquidity is sufficient to cover working capital needs and future growth.

Casey's General Stores did not repurchase any shares during the third quarter of fiscal year 2022. However, the company announced on March 3, 2022, an extension and expansion of its share repurchase program, authorizing up to $400 million for future repurchases.