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Casey's Reports Strong 3rd Quarter

ANKENY, Iowa--(BUSINESS WIRE)--

Casey’s General Stores, Inc. (“Casey’s” or the “Company”) (Nasdaq symbol CASY) today reported diluted earnings per share of $1.13 for the third quarter of fiscal 2019 ended January 31, 2019, compared to $0.48 per share for the same quarter a year ago, or $5.08 when including the one-time benefit of the enactment of tax reform. Fiscal 2019 year-to-date diluted earnings per share were $4.83, compared to $3.20 per share for the same quarter a year ago, or $7.80 when including the tax reform one-time benefit. "We are optimistic about the direction we are moving the Company," said Terry Handley, President and Chief Executive Officer. "Effective operating expense control, combined with a favorable fuel margin environment and continued focus on strategic pricing 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:

  • Began E-Commerce and mobile commerce system integration testing
  • Completed fuel price optimization pilot. Scheduled fiscal fourth quarter roll-out.
  • Hired a Director of Fuel Procurement
  • Piloting food and grocery price optimization software
  • Implemented enhancements to our store labor management

Fuel - For the quarter, total average fuel margin was 22.1 cents per gallon, while same-store gallons sold were down 3.4%. "We continue to be proactive in managing a balanced approach to retail fuel pricing in order to maximize gross profit dollars. As a result of these efforts and a favorable fuel margin environment, gross profit dollars were up over 22% for the quarter," said Handley. "We have confidence in our ability to execute our overall fuel strategy." Total gallons sold for the quarter were up 2.7% to 554.5 million gallons while total gross profit dollars increased 22.2% to $122.6 million. Year to date, same-store gallons sold were down 1.4% with an average margin of 20.8 cents per gallon. Year to date, total gross profit dollars increased 13.9% to $364.7 million.

Grocery and Other Merchandise - For the quarter, same-store sales were up 3.4% with total average margin of 31.9%. "We experienced an acceleration in same-store sales in this category and believe that we continue to gain market share in key areas," said Handley. "We are encouraged by the results and our ability to realize strong margins year-to-date at the high end of our guidance range, which drove gross profit dollar growth." For the third quarter, total grocery and other merchandise revenue increased 8.2% to $543.8 million, and total gross profit dollars were up 8.3% to $173.5 million. Total revenue for the first nine months was up 8.0% to $1.8 billion. Same-store sales year to date were up 3.0% with an average margin of 32.2%.

Prepared Food and Fountain - Same-store sales for the quarter were up 1.5% with total average margin of 62.3%. "Targeted price increases, along with more favorable commodity prices helped expand margin 180 basis points in a competitive environment, as compared to the same quarter in prior year," said Handley. Total prepared food and fountain revenue increased 6.5% to $256.1 million in the third quarter while total gross profit dollars grew 9.6% to $159.7 million. For the first nine months, total revenue increased 7.3% to $820.2 million. Year to date, same-store sales were up 1.8% with an average margin of 62.2%.

Operating Expenses - For the third quarter, total operating expenses increased 5.7% to $341.5 million. Year to date, operating expenses are up 8.1%. Same-store operating expenses excluding credit card fees were down 2.1% for the quarter. The increase in total operating expenses was primarily attributable to operating 103 more stores than the same quarter in the prior year. "The results in our third quarter continue to demonstrate our commitment to effectively manage operating expenses," noted Handley. "Same store hours were down in the quarter, partially due to enhancements made to store labor management. We are pleased with our efforts to better align labor hours with consumer traffic and demand."

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

 
Store Count
Stores at 4/30/18 2,073
New Store Construction 41
Acquisitions 13
Acquisitions not opened (1)
Prior Acquisitions opened 5
Closed (8)
Stores at 1/31/19 2,123
 

The Company had 17 acquisition stores under agreement to purchase and a new store pipeline of 133 sites, including 48 under construction as of January 31, 2019. "We are encouraged with our current growth opportunities," said Handley. "We are in strong financial position to continue to build and acquire stores and we will maintain a disciplined approach to allocating capital for unit growth."

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 third quarter.

Dividend - At its March meeting, the Board of Directors declared a quarterly dividend of $0.29 per share. The dividend is payable May 15, 2019 to shareholders of record on May 1, 2019.

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

   
Same-store Sales Margin
Previous   Current Previous   Current
Fuel (Gallons and CPG) (1.0%) - 0.5% (2.0%) - (0.5)% 19.0 - 21.0 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% 60.5 - 62.5%
 
Previous Current
Operating Expenses 8.5 - 10.5% 7.5 - 9.5%
Depreciation and Amortization 13.0 - 15.0% 11.0 - 13.0%
New Store Construction 60 stores 55-60 stores
Acquisitions 20+ 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,
2019   2018 2019   2018
Total revenue $ 2,048,076 $ 2,054,603 $ 7,174,513 $ 6,302,087
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) 1,577,811 1,634,679 5,672,159 4,937,809
Operating expenses 341,536 323,041 1,045,114 967,237
Depreciation and amortization 61,324 57,042 181,520 163,568
Interest, net   13,310     13,470     41,907     37,821  
Income before income taxes 54,095 26,371 233,813 195,652
Federal and state income taxes   12,260     (166,594 )   55,139     (102,989 )
Net income $ 41,835   $ 192,965   $ 178,674   $ 298,641  
Net income per common share
Basic $ 1.14   $ 5.13   $ 4.87   $ 7.87  
Diluted $ 1.13   $ 5.08   $ 4.83   $ 7.80  
Basic weighted average shares 36,717,415 37,579,497 36,694,308 37,932,071
Plus effect of stock compensation   296,411     372,643     291,783     369,842  
Diluted weighted average shares   37,013,826     37,952,140     36,986,091     38,301,913  
 
   

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

 
January 31, 2019 April 30, 2018
Assets
Current assets
Cash and cash equivalents $ 34,169 $ 53,679
Receivables 40,899 45,045
Inventories 250,897 241,668
Prepaid expenses 9,752 5,766
Income tax receivable   15,555     50,682  
Total current assets   351,272     396,840  
Other assets, net of amortization 46,519 29,909
Goodwill 144,948 140,258
Property and equipment, net of accumulated depreciation of $1,771,005 at January 31, 2019 and $1,611,177 at April 30, 2018   3,040,860     2,902,920  
Total assets $ 3,583,599   $ 3,469,927  
Liabilities and Shareholders’ Equity
Current liabilities
Notes payable to bank $ 50,000 $ 39,600
Current maturities of long-term debt 16,637 15,374
Accounts payable 242,399 321,419
Accrued expenses   154,665     131,457  
Total current liabilities   463,701     507,850  
Long-term debt, net of current maturities 1,288,952 1,291,725
Deferred income taxes 379,376 341,946
Deferred compensation 15,571 15,928
Insurance accruals, net of current portion 21,395 19,748
Other long-term liabilities   23,736     21,589  
Total liabilities   2,192,731     2,198,786  
Total shareholders’ equity   1,390,868     1,271,141  
Total liabilities and shareholders’ equity $ 3,583,599   $ 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 1/31/2019   Fuel  

Grocery &
Other
Merchandise

 

Prepared Food
& Fountain

  Other   Total
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
Three months ended 1/31/2018
Revenue $ 1,297,340 $ 502,750 $ 240,618 $ 13,895 $ 2,054,603
Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 100,272 $ 160,150 $ 145,632 $ 13,870 $ 419,924
7.7 % 31.9 % 60.5 % 99.8 % 20.4 %
Fuel gallons 539,665
 
 
Summary by Category (Amounts in thousands)
 
Nine months ended 1/31/2019 Fuel

Grocery &
Other
Merchandise

Prepared Food
& Fountain

Other Total
Revenue $ 4,502,904 $ 1,806,822 $ 820,208 $ 44,579 $ 7,174,513
Revenue less cost of goods sold (exclusive of 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
Nine months ended 1/31/2018
Revenue $ 3,824,571 $ 1,672,315 $ 764,456 $ 40,745 $ 6,302,087
Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 320,170 $ 533,647 $ 469,787 $ 40,674 $ 1,364,278
8.4 % 31.9 % 61.5 % 99.8 % 21.6 %
Fuel gallons 1,666,404
 
   
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 % (1.1 )% (3.4 )% F2019

20.5

¢

20.0

¢

22.1

¢

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 % 2.7 % 3.4 % F2019 32.4 % 32.4 % 31.9 %
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 % 2.2 % 1.5 % F2019 62.0 % 62.4 % 62.3 %
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 March 12, 2019. 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 March 11, 2022.

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