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Casey's Building Momentum With Launch of Rewards Program in Third Quarter

·11 mins read

Casey’s General Stores, Inc. ("Casey’s" or the "Company") (Nasdaq symbol CASY) today reported diluted earnings per share of $0.91 for the third quarter of fiscal year 2020 ended January 31, 2020, compared to $1.13 per share for the same quarter a year ago. An unfavorable pricing environment compared to the same period a year ago led to lower growth in fuel gross profit dollars. "We are optimistic about the January launch of the Casey's Rewards program. With strong initial membership growth, we look forward to further developing the connection with our guests through this platform," said Darren Rebelez, President and Chief Executive Officer. "We are excited to begin executing on the strategic plan we unveiled in January, which we believe will continue to generate shareholder value," stated Rebelez.

Fuel - For the quarter, average fuel margin was 21.7 cents per gallon, while same-store gallons sold were down 2.0%. Third quarter gross profit dollars increased 1.4% to $124.3 million, and total gallons sold were up 3.3% to 572.7 million gallons. "Despite a challenging demand environment, and comparing against the strongest fuel margin quarter from the prior year, we were able to leverage a more robust price optimization and supply capability to better control the impact of unfavorable market conditions," said Rebelez. For the nine months ended January 31, 2020, total gallons sold were up 3.2% to 1.8 billion. Same-store gallons sold year to date were down 2.0% with an average margin of 23.0 cents per gallon. In that same period, gross profit dollars increased 14.1% to $416.0 million.

Grocery and Other Merchandise - For the quarter, same-store sales were up 3.5% with average margin of 32.9%. "Third quarter average margin benefited from a favorable product mix shift to higher margin items," said Rebelez. "Given the changes in the regulatory environment impacting this category, we are pleased with the acceleration in same-store sales." For the third quarter, total grocery and other merchandise revenue increased 7.1% to $582.4 million, and gross profit dollars increased 10.5% to $191.7 million. Total revenue for the first nine months was up 6.9% to $1.9 billion, while total gross profit dollars grew 7.7% to $627.3 million. Year-to-date same-store sales were up 3.2% with an average margin of 32.5%.

Prepared Food and Fountain - Same-store sales for the quarter were up 2.8% with average margin of 60.2%. "Our same-store sales grew throughout the quarter, and were the strongest results in the last ten quarters. The new technology implemented in the last nine months has allowed us to better reach our guests with attractive promotional offers, which will only be enhanced by the launch of our rewards program, where early results have been encouraging," said Rebelez. Same-store sales were up 3.0% without the impact of the deferral of revenue from the Casey's Rewards program. The average margin was adversely impacted by higher commodity costs compared to prior year and increased promotional activity. Total prepared food and fountain revenue increased 6.8% to $273.6 million in the third quarter while gross profit dollars grew to $164.8 million. For the first nine months, total revenue increased 5.7% to $867.4 million while total gross profit dollars grew 3.9% to $530.3 million. Year to date, same-store sales were up 2.1% with an average margin of 61.1%.

Operating Expenses - For the third quarter, total operating expenses increased 10.5% to $377.3 million. Increases in credit card fees and the timing of incentive compensation costs drove 1.9% of the quarterly increase. Year to date, operating expenses were up 8.2%. The increase in total operating expenses for third quarter and year-to-date was primarily attributable to operating 70 more stores than the same quarter in the prior year, and increases in technology costs. Same-store operating expenses excluding credit card fees were up 5.4% for the quarter. "Same-store operating expenses were in line with our expectations as we cycled over several expense reduction initiatives. On a two-year stacked basis, same-store operating expenses excluding credit card fees were up 3.3%. We will continue to be focused on controlling operating expenses as we begin to integrate new capabilities related to our strategic plan," noted Rebelez.

Expansion - The following table represents the roll forward of store growth through the third quarter of fiscal 2020:

Store Count

Stores at 4/30/19

2,146

New store construction

50

Acquisitions

10

Acquisitions not opened

(4)

Prior acquisitions opened

3

Closed

(12)

Stores at 1/31/20

2,193

The Company has 11 acquisition stores under agreement to purchase and a new store pipeline of 88 sites, including 15 under construction as of January 31, 2020. "We are excited about the significant addressable market in our current geographic footprint, and are in a strong financial position to accelerate growth over the next few years, both organically and through acquisitions," said Rebelez.

Share Repurchase Program - The Company has $300 million remaining under its existing share repurchase program. On March 6, 2020, the program's authorization was extended through the end of the Company's 2022 fiscal year. There were no repurchases made against the authorization in the third quarter.

Dividend - At its March meeting, the Board of Directors declared a quarterly dividend of $0.32 per share. The dividend is payable May 15, 2020 to shareholders of record on May 1, 2020.

Fiscal 2020 Guidance - The following represents our current fiscal 2020 guidance:

Same-store Sales

Margin

Previous

Current

Previous

Current

Fuel (Gallons and Cents Per Gallon)

(1.0%) - .5%

(1.0%) - .5%

21.0 - 23.0

21.0 - 23.0

Grocery and Other Merchandise

2.5 - 4.0%

2.5 - 4.0%

32.0 - 33.0%

32.0 - 33.0%

Prepared Food and Fountain

1.5 - 4.0%

1.5 - 4.0%

61.0 - 63.0%

61.0 - 63.0%

Operating Expenses

7.0 - 9.0%

7.0 - 9.0%

Depreciation and Amortization

6.0 - 8.0%

3.0 - 5.0%

New Store Construction

60 stores

60 stores

Acquisitions

25 stores

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
January 31,

Nine Months Ended
January 31,

2020

2019

2020

2019

Total revenue

$

2,248,198

$

2,048,076

$

7,362,413

$

7,174,513

Cost of goods sold (exclusive of depreciation and amortization, shown separately below)

1,751,335

1,577,811

5,742,799

5,672,159

Operating expenses

377,330

341,536

1,130,554

1,045,114

Depreciation and amortization

63,285

61,324

185,981

181,520

Interest, net

13,209

13,310

39,613

41,907

Income before income taxes

43,039

54,095

263,466

233,813

Federal and state income taxes

9,080

12,260

61,711

55,139

Net income

$

33,959

$

41,835

$

201,755

$

178,674

Net income per common share

Basic

$

0.92

$

1.14

$

5.47

$

4.87

Diluted

$

0.91

$

1.13

$

5.43

$

4.83

Basic weighted average shares

36,920,960

36,717,415

36,901,338

36,694,308

Plus effect of stock compensation

221,917

296,411

221,187

291,783

Diluted weighted average shares

37,142,877

37,013,826

37,122,525

36,986,091

Casey’s General Stores, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)

January 31, 2020

April 30, 2019

Assets

Current assets

Cash and cash equivalents

$

43,539

$

63,296

Receivables

46,383

37,856

Inventories

263,185

273,040

Prepaid expenses

14,430

7,493

Income tax receivable

22,091

28,895

Total current assets

389,628

410,580

Other assets, net of amortization

70,815

41,154

Goodwill

157,648

157,223

Property and equipment, net of accumulated depreciation of $1,983,258 at January 31, 2020 and $1,826,936 at April 30, 2019

3,303,943

3,122,419

Total assets

$

3,922,034

$

3,731,376

Liabilities and Shareholders’ Equity

Current liabilities

Lines of credit

$

76,000

$

75,000

Current maturities of long-term debt

577,743

17,205

Accounts payable

275,903

335,240

Accrued expenses

175,176

163,487

Total current liabilities

1,104,822

590,932

Long-term debt, net of current maturities

715,121

1,283,275

Deferred income taxes

425,242

385,788

Deferred compensation

15,892

15,881

Insurance accruals, net of current portion

22,673

22,663

Other long-term liabilities

49,694

24,068

Total liabilities

2,333,444

2,322,607

Total shareholders’ equity

1,588,590

1,408,769

Total liabilities and shareholders’ equity

$

3,922,034

$

3,731,376

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 strategic 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 1/31/2020

Fuel

Grocery &
Other
Merchandise

Prepared Food
& Fountain

Other

Total

Revenue

$

1,376,018

$

582,407

$

273,630

$

16,143

$

2,248,198

Revenue less cost of goods sold (exclusive of depreciation and amortization)

$

124,257

$

191,692

$

164,795

$

16,119

$

496,863

9.0

%

32.9

%

60.2

%

99.9

%

22.1

%

Fuel gallons

572,746

Three months ended 1/31/2019

Revenue

$

1,233,620

$

543,773

$

256,144

$

14,539

$

2,048,076

Revenue less cost of goods sold (exclusive of depreciation and amortization)

$

122,559

$

173,512

$

159,682

$

14,512

$

470,265

9.9

%

31.9

%

62.3

%

99.8

%

23.0

%

Fuel gallons

554,479

Summary by Category (Amounts in thousands)

Nine months ended 1/31/2020

Fuel

Grocery &
Other
Merchandise

Prepared Food
& Fountain

Other

Total

Revenue

$

4,518,061

$

1,930,886

$

867,353

$

46,113

$

7,362,413

Revenue less cost of goods sold (excluding depreciation and amortization)

$

416,045

$

627,278

$

530,259

$

46,032

$

1,619,614

9.2

%

32.5

%

61.1

%

99.8

%

22.0

%

Fuel gallons

1,805,901

Nine months ended 1/31/2019

Revenue

$

4,502,904

$

1,806,822

$

820,208

$

44,579

$

7,174,513

Revenue less cost of goods sold (excluding depreciation and amortization)

$

364,691

$

582,629

$

510,540

$

44,494

$

1,502,354

8.1

%

32.2

%

62.2

%

99.8

%

20.9

%

Fuel gallons

1,750,024

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

F2020

(2.0

)%

(1.8

)%

(2.0

)%

F2020

24.4

¢

22.9

¢

21.7

¢

F2019

0.5

(1.1

)

(3.4

)

(2.8

)%

(1.7

)%

F2019

20.5

20.0

22.1

18.6

¢

20.3

¢

F2018

1.7

1.9

3.8

2.0

2.3

F2018

19.3

19.7

18.6

16.3

18.5

Grocery & Other Merchandise

Grocery & Other Merchandise

Same-store Sales

Margin

Q1

Q2

Q3

Q4

Fiscal
Year

Q1

Q2

Q3

Q4

Fiscal
Year

F2020

3.2

%

3.2

%

3.5

%

F2020

31.3

%

33.3

%

32.9

%

F2019

3.2

2.7

3.4

5.7

%

3.6

%

F2019

32.4

32.4

31.9

31.5

%

32.1

%

F2018

3.1

2.5

2.5

(0.4

)

1.9

F2018

31.9

32.0

31.9

31.2

31.8

Prepared Food & Fountain

Prepared Food & Fountain

Same-store Sales

Margin

Q1

Q2

Q3

Q4

Fiscal
Year

Q1

Q2

Q3

Q4

Fiscal
Year

F2020

1.6

%

1.9

%

2.8

%

F2020

62.2

%

60.9

%

60.2

%

F2019

1.7

2.2

1.5

2.0

%

1.9

%

F2019

62.0

62.4

62.3

62.2

%

62.2

%

F2018

3.7

2.1

1.7

(1.3

)

1.7

F2018

62.5

61.3

60.5

59.7

61.0

Corporate information is available at this website: https://www.caseys.com. Earnings will be reported during a conference call on March 10, 2020. The call will be broadcast live over the Internet at 9:30 a.m. CST. To access the call, go to the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx. No access code is required. A webcast replay of the call will remain available in an archived format on the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx for one year after the call.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200309005782/en/

Contacts

Bill Walljasper
(515) 965-6505