Casey’s General Stores, Inc. (“Casey’s” or the “Company”) (Nasdaq symbol CASY) today reported diluted earnings per share of $1.80 for the second quarter of fiscal 2019 ended October 31, 2018, compared to $1.28 per share for the same quarter a year ago. "We're moving the Company forward on multiple fronts," said Terry Handley, President and Chief Executive Officer. "The ongoing efforts around operating expense control, combined with a continued focus on strategic pricing, new store openings, and the favorable impact of tax reform produced strong diluted earnings per share growth."
Value Creation Plan Update - The Company has completed or made progress on the following value creation plan activities:
- Launched the Fleet Card program in late October
- Continued emphasis on product optimization in fuel program
- Finalized search for a Director of Fuel Procurement
- Piloting the fuel price optimization software October through December
- Optimized merchandise promotions to improve inside margins
- Onboarded both a Vice President of Digital Customer Experience and a Director of Digital Marketing
Fuel - For the quarter, same-store gallons sold were down 1.1% with an average margin of 20.0 cents per gallon. "With the expanded resources in our fuel team, we have become more proactive at managing retail fuel pricing," said Handley. "Gross profit dollar growth was strong despite same-store gallon movement being under our annual guidance range for the second quarter, due mainly to softer consumer demand. We remain excited about this category moving forward, with product and price optimization, procurement opportunities, and the fleet card program expected to drive future benefits." Total gallons sold for the quarter were up 5.7% to 593.8 million gallons while gross profit dollars increased 7.2% to $118.7 million. Year to date, same-store gallons sold were down 0.3% with an average margin of 20.3 cents per gallon. Year to date, gross profit dollars increased 10.1% to $242.1 million.
Grocery and Other Merchandise - For the quarter, same-store sales were up 2.7% with an average margin of 32.4%. "The grocery and other merchandise category continues to perform well," said Handley. "For the second straight quarter, we realized stronger margins at the high end of our guidance range, which drove gross profit dollar growth. The packaged beverage and other tobacco subcategories led the way in contributing to that growth." For the second quarter, total grocery and other merchandise revenue increased 8.1% to $618.3 million, and gross profit dollars were up 9.3% to $200.2 million. Total revenue for the first six months was up 8.0% to $1.3 billion. Same-store sales year to date were up 2.9% with an average margin of 32.4%.
Prepared Food and Fountain - Same-store sales for the quarter were up 2.2% with an average margin of 62.4%. "Strategic price increases helped expand margin in the quarter in a competitive environment," said Handley. "Our breakfast daypart continues to be a strong contributor to overall results." Total prepared food and fountain revenue increased 8.0% to $283.1 million in the second quarter while gross profit dollars grew 10.1% to $176.7 million. For the first six months, total revenue increased 7.7% to $564.1 million. Year to date, same-store sales were up 2.0% with an average margin of 62.2%.
Operating Expenses - For the second quarter, total operating expenses increased 6.6% to $344.2 million. Year to date, operating expenses are up 9.2%. Same-store operating expenses excluding credit card fees were down 0.1% for the quarter. The increase in total operating expenses was primarily attributable to operating 94 more stores than the same quarter in the prior year. "Our second quarter results demonstrated our commitment to effectively controlling operating expenses," noted Handley. "Despite higher credit card fees and fleet fuel expenses, our team was able to continue to drive same-store operating expenses down in the second quarter as compared to prior year. The largest contributor to that success was the continued efforts around managing the hours worked at our stores."
Expansion - The following table represents the roll forward of store growth through the second quarter of fiscal 2019:
|Stores at 4/30/18||2,073|
|New Store Construction||25|
|Acquisitions not opened||(2)|
Prior Acquisitions opened
|Stores at 10/31/18||2,097|
The Company had 23 acquisition stores under agreement to purchase and a land bank of 95 sites (in addition to 36 that were under construction) as of October 31, 2018. "We are pleased with our current growth opportunities," said Handley. "We remain encouraged with the acquisition environment and will continue to be a disciplined buyer. Combining acquisitions with our organic growth pipeline gives us the agility to pull multiple levers to drive further expansion."
Share Repurchase Program - The Company has $300 million remaining on its authorization from March 2018. There were no repurchases made against that authorization in the second quarter.
Dividend - At its December meeting, the Board of Directors declared a quarterly dividend of $0.29 per share. The dividend is payable February 15, 2019 to shareholders of record on February 1, 2019.
Fiscal 2019 Guidance - Below is a summary of the current fiscal 2019 guidance:
|Fuel (Gallons and CPG)||1.5 - 3.0%||(1.0%) - 0.5%||18.5 - 20.5||19.0 - 21.0|
|Grocery and Other Merchandise||1.5 - 3.0%||1.5 - 3.0%||31.5 - 32.5%||31.5 - 32.5%|
|Prepared Food and Fountain||1.5 - 3.5%||1.5 - 3.5%||60.0 - 62.0%||60.0 - 62.0%|
|Operating Expenses||8.5 - 10.5%||8.5 - 10.5%|
|Depreciation and Amortization||14.0 - 16.0%||13.0 - 15.0%|
|New Store Construction||60 stores||60 stores|
|Acquisitions||20+ stores||20+ stores|
Casey’s General Stores, Inc.
Statements of Income
(Dollars in thousands, except share and per share amounts) (Unaudited)
|Three Months Ended||Six Months Ended|
|October 31,||October 31,|
|Cost of goods sold (exclusive of depreciation and amortization, shown separately below)||2,027,684||1,686,088||4,094,348||3,303,130|
|Depreciation and amortization||61,356||54,157||120,196||106,526|
|Income before income taxes||90,588||77,575||179,718||169,281|
|Federal and state income taxes||23,973||28,657||42,879||63,605|
|Net income per common share|
|Basic weighted average shares||36,698,528||37,804,649||36,683,450||38,108,105|
|Plus effect of stock compensation||318,943||378,950||314,181||379,802|
|Diluted weighted average shares||37,017,471||38,183,599||36,997,631||38,487,907|
Casey’s General Stores, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
|October 31, 2018||April 30, 2018|
|Cash and cash equivalents||$||51,887||$||53,679|
|Income tax receivable||16,849||50,682|
|Total current assets||382,178||396,840|
|Other assets, net of amortization||39,813||29,909|
|Property and equipment, net of accumulated depreciation of $1,715,433 at October 31, 2018 and $1,611,177 at April 30, 2018||2,983,043||2,902,920|
|Liabilities and Shareholders’ Equity|
|Notes payable to bank||$||—||$||39,600|
|Current maturities of long-term debt||15,384||15,374|
|Total current liabilities||470,976||507,850|
|Long-term debt, net of current maturities||1,283,992||1,291,725|
|Deferred income taxes||374,665||341,946|
|Insurance accruals, net of current portion||20,155||19,748|
|Other long-term liabilities||23,206||21,589|
|Total shareholders’ equity||1,357,079||1,271,141|
|Total liabilities and shareholders’ equity||$||3,545,657||$||3,469,927|
Certain statements in this news release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from future results expressed or implied by those statements, including our ability to execute our value creation plan or to realize benefits therefrom. Casey’s disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
|Summary by Category (Amounts in thousands)|
|Three months ended 10/31/2018||Fuel||Merchandise||& Fountain||Other||Total|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||118,656||$||200,193||$||176,675||$||14,797||$||510,321|
|Three months ended 10/31/2017|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||110,686||$||183,133||$||160,510||$||13,328||$||467,657|
|Summary by Category (Amounts in thousands)|
|Six months ended 10/31/2018||Fuel||Merchandise||& Fountain||Other||Total|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||242,132||$||409,119||$||350,859||$||29,979||$||1,032,089|
|Six months ended 10/31/2017|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||219,898||$||373,497||$||324,155||$||26,804||$||944,354|
|Fuel Gallons||Fuel Margin|
|Same-store Sales||(Cents per gallon, excluding credit card fees)|
|Grocery & Other Merchandise||Grocery & Other Merchandise|
|Prepared Food & Fountain||Prepared Food & Fountain|
Corporate information is available at this Web site: http://www.caseys.com. Earnings will be reported during a conference call on December 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 December 11, 2022.