CASY
$127.88
Casey's General Stor
($1.21)
(.94%)
Earnings Details
1st Quarter July 2018
Monday, September 10, 2018 4:18:00 PM
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Summary

Casey's General Stor Beats

Casey's General Stor (CASY) reported 1st Quarter July 2018 earnings of $1.90 per share on revenue of $2.6 billion. The consensus earnings estimate was $1.68 per share on revenue of $2.6 billion. The Earnings Whisper number was $1.72 per share. Revenue grew 23.6% on a year-over-year basis.

Casey' General Stores Inc, together with its subsidiaries, operates convenience stores under the Caseys General Store name in 14 Midwestern states. Its stores offers a selection of food, beverage, and tobacco products, as well as other nonfood items.

Results
Reported Earnings
$1.90
Earnings Whisper
$1.72
Consensus Estimate
$1.68
Reported Revenue
$2.59 Bil
Revenue Estimate
$2.55 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Casey's Reports First Quarter Results; Value Creation Plan On Track

ANKENY, Iowa--(BUSINESS WIRE)-- Casey’s General Stores, Inc. (“Casey’s” or the “Company”) (Nasdaq symbol CASY) today reported diluted earnings per share of $1.90 for the first quarter of fiscal 2019 ended July 31, 2018, compared to $1.46 per share for the same quarter a year ago. "The combination of recent investments made in expanding our store count, a more proactive strategic pricing approach in all areas of the business, continued focus on reducing labor hours inside the stores, the favorable impacts of tax reform, and share repurchases contributed to strong diluted earnings per share growth," said Terry Handley, President and Chief Executive Officer. "We continue to invest in the Value Creation Plan that we believe will drive long-term shareholder value, and we remain on track to begin realizing benefits in the second half of fiscal 2019."

Value Creation Plan Update - The Company has completed or made progress on the following value creation plan activities:

  • Finalizing marketing plan with our fleet card vendor to launch in fiscal 2nd quarter
  • Continued focus on product optimization in fuel program
  • Conducting a search for a Vice President of Digital and a Fuel Procurement Manager
  • Finalized contracts with separate vendors for fuel and inside price optimization
  • On schedule to begin pilot program in fuel price optimization in fiscal 2nd quarter
  • Finalized several contracts as part of our E-commerce and customer facing platforms

Fuel - For the quarter, same-store gallons sold were up 0.5% with an average margin of 20.5 cents per gallon. "As we build our fuel team, we have been more proactively managing retail fuel pricing," said Handley. "We believe this drove a more timely response to changes in market conditions, which helped realize a stronger quarterly fuel margin. This approach, combined with rising retail fuel prices, led to an overall softer demand for fuel. While same-store gallon movement was under our annual guidance range, we continued to outpace our peers in same-store gallons, and overall we are very pleased with the gross profit dollar growth." Total gallons sold for the quarter were up 6.5% to 601.8 million gallons while gross profit dollars increased 13.1% to $123.5 million.

Grocery and Other Merchandise - For the quarter, same-store sales were up 3.2% with an average margin of 32.4%. "We are pleased about the overall direction of our grocery and other merchandise category," said Handley. "Our focus continues to be on managing the promotional environment to drive profitable growth. Some of our faster growing and higher margin product lines, such as packaged beverages, produced strong quarterly results, particularly in May." For the first quarter, total grocery and other merchandise revenue increased 7.9% to $644.8 million, and gross profit dollars were up nearly 10% to $208.9 million.

Prepared Food and Fountain - Same-store sales for the quarter were up 1.7% with an average margin of 62.0%. "Our prepared food category showed significant improvement from fourth quarter and moderate growth overall, including particularly strong results in the breakfast daypart." said Handley. "These results helped offset some softness in our bakery category. Overall, our increased investment in pizza promotions did not significantly affect our margin. Combining those promotions with other pricing strategies produced a margin at the top end of our guidance for the quarter." Total prepared food and fountain revenue increased 7.3% to $281.0 million in the first quarter while gross profit dollars grew 6.4% to $174.2 million.

Operating Expenses - For the first quarter, total operating expenses increased 11.9% to $359.4 million. Same-store operating expenses excluding credit card fees were up 1.6% for the quarter. The increase in total operating expenses was primarily attributable to operating 105 more stores than the same quarter in the prior year. The Company incurred increases of approximately $8 million in credit card fees and fleet fuel expense, and $3.6 million in health care costs. "The focus on reducing hours worked in our stores and changes to 24-hour and pizza delivery locations allowed us to manage store level operating expenses effectively," added Handley. "However, we were challenged by higher fuel prices, which caused a significant increase in credit card fees and fleet fuel expenses compared to the same quarter last year."

Expansion - The following table represents the roll forward of store growth in the first quarter of fiscal 2019:

          Store Count
Stores at 4/30/18 2,073
New Store Construction 15
Acquisitions 1
Acquisitions not opened (1)
Prior Acquisitions opened 1
Closed (4)
Stores at 7/31/18 2,085
 

The Company had 14 acquisition stores under agreement to purchase and a land bank of 103 sites as of July 31, 2018. "The increased focus in store development over the last couple of years has allowed us to build a bank of land sites for future growth," said Handley. "It will allow us to have a more controlled and uniform rollout of our new stores each quarter. We also continue to be encouraged by the number of conversations we are having with potential sellers."

Share Repurchase Program - During the first quarter of fiscal 2019, the Company finished its repurchase on the initial $300 million repurchase program authorized in March 2017, repurchasing 352,592 shares for approximately $35.2 million, or an average price of $99.97 per share. The Company also has a second $300 million authorization that was approved by the Board in March 2018. There were no repurchases made against that authorization in the first quarter. "We felt it was appropriate to reallocate capital in the near term to support and expedite our value creation plan as we get closer to launching those programs," said Handley.

Dividend - At its September meeting, the Board of Directors declared a quarterly dividend of $0.29 per share. The dividend is payable November 15, 2018 to shareholders of record on November 1, 2018.

Fiscal 2019 Guidance -Below is a summary of the current fiscal 2019 guidance:

  Same-store Sales   Average Margin
Fuel (Gallons and CPG) 1.5 - 3.0%   18.5 - 20.5
Grocery and Other Merchandise 1.5 - 3.0% 31.5 - 32.5%
Prepared Food and Fountain 1.5 - 3.5% 60.0 - 62.0%
 
Operating Expenses 8.5- 10.5%
Depreciation and Amortization 14.0 - 16.0%
New Store Construction 60 stores
Acquisitions 20+ stores
 

Casey’s General Stores, Inc.

Condensed Consolidated

Statements of Income

(Dollars in thousands, except share and per share amounts) (Unaudited)

 
Three Months Ended
July 31,
2018   2017
Total revenue $ 2,588,432 $ 2,093,739
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) 2,066,664 1,617,042
Operating expenses 359,392 321,247
Depreciation and amortization 58,840 52,369
Interest, net 14,406 11,375
Income before income taxes 89,130 91,706
Federal and state income taxes 18,906 34,948
Net income $ 70,224 $ 56,758
Net income per common share
Basic $ 1.92 $ 1.48
Diluted $ 1.90 $ 1.46
Basic weighted average shares 36,669,021 38,360,104
Plus effect of stock compensation 311,387 480,184
Diluted weighted average shares 36,980,408 38,840,288
 

Casey’s General Stores, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

   
July 31, 2018 April 30, 2018
Assets
Current assets
Cash and cash equivalents $ 44,842 $ 53,679
Receivables 46,486 45,045
Inventories 263,879 241,668
Prepaid expenses 8,940 5,766
Income tax receivable 42,404 50,682
Total current assets 406,551 396,840
Other assets, net of amortization 32,769 29,909
Goodwill 140,623 140,258
Property and equipment, net of accumulated depreciation of $1,662,860 at July 31, 2018 and $1,611,177 at April 30, 2018 2,944,564 2,902,920
Total assets $ 3,524,507 $ 3,469,927
Liabilities and Shareholders’ Equity
Current liabilities
Notes payable to bank $ 27,411 $ 39,600
Current maturities of long-term debt 15,379 15,374
Accounts payable 333,299 321,419
Accrued expenses 149,424 131,457
Total current liabilities 525,513 507,850
Long-term debt, net of current maturities 1,291,638 1,291,725
Deferred income taxes 349,656 341,946
Deferred compensation 16,095 15,928
Other long-term liabilities 42,906 41,337
Total liabilities 2,225,808 2,198,786
Total shareholders’ equity 1,298,699 1,271,141
Total liabilities and shareholders’ equity $ 3,524,507 $ 3,469,927
 

Certain statements in this news release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from future results expressed or implied by those statements, including our ability to execute our value creation plan or to realize benefits therefrom. Casey’s disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

Summary by Category (Amounts in thousands)
    Grocery & Other   Prepared Food    
Three months ended 7/31/2018 Fuel Merchandise & Fountain Other Total
Revenue $ 1,647,417 $ 644,800 $ 281,003 $ 15,212 $ 2,588,432
Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 123,476 $ 208,925 $ 174,184 $ 15,183 $ 521,768
7.5 % 32.4 % 62.0 % 99.8 % 20.2 %
Fuel gallons 601,795
 
Three months ended 7/31/2017
Revenue $ 1,220,985 $ 597,413 $ 261,840 $ 13,501 $ 2,093,739
Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 109,212 $ 190,364 $ 163,645 $ 13,476 $ 476,697
8.9 % 31.9 % 62.5 % 99.8 % 22.8 %
Fuel gallons 565,047
 
Fuel Gallons       Fuel Margin
Same-store Sales (Cents per gallon, excluding credit card fees)
  Q1   Q2   Q3   Q4  

Fiscal
Year

  Q1   Q2   Q3   Q4  

Fiscal
Year

F2019 0.5 % F2019 20.5¢
F2018 1.7 1.9 % 3.8 % 2.0 % 2.3 % F2018 19.3 19.7¢ 18.6¢ 16.3¢ 18.5¢
F2017 3.1 3.7 2.6 (0.5 ) 2.1 F2017 19.5 18.6 17.9 17.2 18.4
 
Grocery & Other Merchandise Grocery & Other Merchandise
Same-store Sales Margin
Q1 Q2 Q3 Q4

Fiscal
Year

Q1 Q2 Q3 Q4

Fiscal
Year

F2019 3.2 % F2019 32.4 %
F2018 3.1 2.5 % 2.5 % (0.4 )% 1.9 % F2018 31.9 32.0 % 31.9 % 31.2 % 31.8 %
F2017 4.7 3.1 3.0 1.5 2.9 F2017 31.6 32.0 31.1 31.1 31.5
 
Prepared Food & Fountain Prepared Food & Fountain
Same-store Sales Margin
Q1 Q2 Q3 Q4

Fiscal
Year

Q1 Q2 Q3 Q4

Fiscal
Year

F2019 1.7 % F2019 62.0 %
F2018 3.7 2.1 % 1.7 % (1.3 )% 1.7 % F2018 62.5 61.3 % 60.5 % 59.7 % 61.0 %
F2017 5.1 5.1 5.8 3.2 4.8 F2017 62.8 62.9 61.7 61.7 62.3
 

Corporate information is available at this Web site: http://www.caseys.com. Earnings will be reported during a conference call on September 11, 2018. The call will be broadcast live over the Internet at 9:30 a.m. CST. To access the call, go to the Press Releases and Webcasts section of our Web site at https://www.caseys.com/investor-relations/press-releases-and-webcasts. No access code is required. A webcast replay of the call will remain available in an archived format, on the Press Releases and Webcasts section of our Web site at https://www.caseys.com/investor-relations/press-releases-and-webcasts until September 11, 2022.

Casey’s General Stores, Inc.
Bill Walljasper, 515-965-6505

Source: Casey’s General Stores, Inc.