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:
|Stores at 4/30/18||2,073|
|New Store Construction||41|
|Acquisitions not opened||(1)|
|Prior Acquisitions opened||5|
|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 $0.29 per share. The dividend is payable May 15, 2019 to shareholders of record on May 1, 2019.
Fiscal 2019 Guidance - Below is a summary of the current fiscal 2019 guidance:
|Fuel (Gallons and CPG)||(1.0%) - 0.5%||(2.0%) - (0.5)%||19.0 - 21.0||19.0 - 21.0|
|Grocery and Other Merchandise||1.5 - 3.0%||1.5 - 3.0%||31.5 - 32.5%||31.5 - 32.5%|
|Prepared Food and Fountain||1.5 - 3.5%||1.5 - 3.5%||60.0 - 62.0%||60.5 - 62.5%|
|Operating Expenses||8.5 - 10.5%||7.5 - 9.5%|
|Depreciation and Amortization||13.0 - 15.0%||11.0 - 13.0%|
|New Store Construction||60 stores||55-60 stores|
|Acquisitions||20+ stores||20+ stores|
Casey’s General Stores, Inc.
Three Months Ended|
Nine Months Ended|
|Cost of goods sold (exclusive of depreciation and amortization, shown separately below)||1,577,811||1,634,679||5,672,159||4,937,809|
|Depreciation and amortization||61,324||57,042||181,520||163,568|
|Income before income taxes||54,095||26,371||233,813||195,652|
|Federal and state income taxes||12,260||(166,594||)||55,139||(102,989||)|
|Net income per common share|
|Basic weighted average shares||36,717,415||37,579,497||36,694,308||37,932,071|
|Plus effect of stock compensation||296,411||372,643||291,783||369,842|
|Diluted weighted average shares||37,013,826||37,952,140||36,986,091||38,301,913|
Casey’s General Stores, Inc.
|January 31, 2019||April 30, 2018|
|Cash and cash equivalents||$||34,169||$||53,679|
|Income tax receivable||15,555||50,682|
|Total current assets||351,272||396,840|
|Other assets, net of amortization||46,519||29,909|
|Property and equipment, net of accumulated depreciation of $1,771,005 at January 31, 2019 and $1,611,177 at April 30, 2018||3,040,860||2,902,920|
|Liabilities and Shareholders’ Equity|
|Notes payable to bank||$||50,000||$||39,600|
|Current maturities of long-term debt||16,637||15,374|
|Total current liabilities||463,701||507,850|
|Long-term debt, net of current maturities||1,288,952||1,291,725|
|Deferred income taxes||379,376||341,946|
|Insurance accruals, net of current portion||21,395||19,748|
|Other long-term liabilities||23,736||21,589|
|Total shareholders’ equity||1,390,868||1,271,141|
|Total liabilities and shareholders’ equity||$||3,583,599||$||3,469,927|
Certain statements in this news release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from future results expressed or implied by those statements, including our ability to execute our value creation plan or to realize benefits therefrom. Casey’s disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
|Summary by Category (Amounts in thousands)|
|Three months ended 1/31/2019||Fuel|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||122,559||$||173,512||$||159,682||$||14,512||$||470,265|
|Three months ended 1/31/2018|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||100,272||$||160,150||$||145,632||$||13,870||$||419,924|
|Summary by Category (Amounts in thousands)|
|Nine months ended 1/31/2019||Fuel|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||364,691||$||582,629||$||510,540||$||44,494||$||1,502,354|
|Nine months ended 1/31/2018|
|Revenue less cost of goods sold (exclusive of depreciation and amortization)||$||320,170||$||533,647||$||469,787||$||40,674||$||1,364,278|
|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 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.