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TheStreet Open House

Casey’s Strong Prepared Food Performance Offsets Cigarette Challenges

Stocks in this article: CASY

Casey’s General Stores, Inc. (Nasdaq: CASY) today reported $0.85 in diluted earnings per share for the second quarter of fiscal 2013 ended October 31, 2012 compared to $0.98 for the same period a year ago. Year to date, diluted earnings per share were $1.86 versus $2.01 for the same period last year. Both the quarter and year-to-date earnings were impacted by lower gas margins when compared to the all-time high gas margins from the same periods a year ago. “Our prepared food program is doing exceptionally well, but the cigarette environment remains very challenging for retailers,” said Chairman and CEO Robert J. Myers. “We are diligently evaluating the competitive landscape and will maintain a disciplined approach when making cigarette price adjustments.”

Gasoline—The Company’s annual goal is to increase same-store gallons sold 1% with an average margin of 14.0 cents per gallon. For the second quarter, same-store gallons sold were down 0.4% with an average margin of 14.9 cents per gallon. “We believe higher retail prices had an adverse impact to sales, however the gas margin environment has been favorable when compared to our annual goal.” said Myers. Total gallons sold for the year were up 3.2% with an average margin of 14.9 cents per gallon. Year-to-date same store gallons sold were down 0.3%.

Grocery and Other Merchandise—Casey’s annual goal is to increase same-store sales 6.2% with an average margin of 32.7%. For the second quarter, same-store sales were down 0.7% with an average margin of 33.4%. “Cigarettes have been adversely impacted by competitive pricing as well as an Illinois state excise tax increase,” stated Myers. “However, the grocery & other merchandise margin is above goal primarily due to a more favorable product mix within the category.” For the six months ended October 31, 2012, same-store sales were up 0.7% with an average margin of 33.4%. Total sales for the year were up 3.6% and gross profit increased 6.4% to $250 million.

Prepared Food and Fountain—The goal for fiscal 2013 is to increase same-store sales 11% with an average margin of 61.1%. For the quarter, same-store sales were up 10.1% with an average margin of 62.5%. “This category continues to benefit from three primary operating initiatives: expanded hours, pizza delivery, and major store remodels,” said Myers. “The margin continues to exceed our annual goal primarily due to an increase in pizza sales.” Year to date, total sales were up 14.5% and gross profit rose 19.4% to $182.1 million.

Operating Expenses—Year to date, operating expenses increased 10.5% to $379.4 million. For the second quarter, operating expenses were up 10.6%. Expenses were impacted by the operating initiatives mentioned above, operating 27 more stores than a year ago, and the completion of 20 replacement stores in the last 12 months. “So far this fiscal year we have converted 150 stores to 24-hour operation, added pizza delivery to 103 stores, and completed 51 major remodels,” stated Myers. “We will continue to implement these initiatives where we believe we can drive cash flow.” Store-level operating expenses for locations not impacted by the initiatives were up approximately 3.5% for the quarter.

Expansion—The annual goal is to increase the total number of stores 4-6%. At the mid-year point, the Company opened 8 new store constructions and completed the acquisition of 3 stores. The Company has also replaced 13 stores. “In November we completed the acquisition of 22 Kum and Go locations and opened our first stores in Tennessee and North Dakota,” stated Myers. “We are on pace to build 30 new stores this fiscal year and continue to be optimistic with the acquisition environment.” Casey’s currently has 13 stores under construction and has 8 stores under written agreement to acquire.

Dividend—At its December meeting, the Board of Directors declared a quarterly dividend of $0.165 per share. The dividend is payable February 15, 2013 to shareholders of record on February 1, 2013.

Casey’s General Stores, Inc.
Condensed Consolidated Statements
of Comprehensive Income

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

(Unaudited)

 
Three months ended October 31,   Six months ended October 31,
  2012   2011 2012   2011
Total revenue $ 1,911,644 1,782,518 $ 3,779,946 3,656,350
Cost of goods sold (exclusive of
depreciation and amortization,
shown separately below) 1,632,331 1,519,600 3,213,659 3,126,650
Gross profit 279,313 262,918 566,287 529,700
Operating expenses 190,040 171,832 379,439 343,248
Depreciation and amortization 27,148 23,432 53,684 46,327
Interest, net 8,637 8,777 17,541 17,711
Income before income taxes 53,488 58,877 115,623 122,414
Federal and state income taxes 20,629 21,245 43,733 45,391
Net Income 32,859 37,632 71,890 77,023
Other comprehensive income ----- ----- ----- -----
Comprehensive income $ 32,859 37,632 $ 71,890 77,023
 
Net income per common share
Basic $ .86 .99 $ 1.88 2.02
Diluted $ .85 .98 $ 1.86 2.01
Basic weighted average shares
outstanding 38,304,840 38,055,909 38,264,724 38,040,142
Plus effect of stock compensation 353,690 342,934 354,434 328,239
Diluted weighted average shares
outstanding 38,658,530 38,398,843 38,619,158 38,368,381
 

Casey’s General Stores, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

   

October 31,

April 30,

2012 2012
Assets
Current assets
Cash and cash equivalents $ 39,327 $ 55,919
Receivables 21,284 21,700
Inventories 178,298 170,794
Prepaid expenses 2,032 1,298
Deferred income taxes 10,604 13,143
Income tax receivable 8,286 16,424
Total current assets     259,831     279,278
Other assets, net of amortization 13,385 12,403
Goodwill 104,686 104,385
Property and equipment, net of
accumulated depreciation of $901,517 at
October 31, 2012, and of $860,998 at April 30, 2012 1,483,659 1,378,749
Total assets   $ 1,861,561   $ 1,774,815
 
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 13,244 $ 10,737
Accounts payable 215,213 211,165
Accrued expenses 86,272 84,739
Total current liabilities     314,729     306,641
Long-term debt, net of current maturities 660,055 667,930
Deferred income taxes 278,092 260,405
Deferred compensation 15,044 14,698
Other long-term liabilities 21,128 19,100
Total liabilities 1,289,048 1,268,774
 
Total shareholders' equity 572,513 506,041
   
Total liabilities and shareholders' equity   $ 1,861,561   $ 1,774,815
 

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. 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.

 
Sales and Gross Profit by Product

(Amounts in thousands)

         
Six months ended Grocery & Other Prepared Food
10/31/12 Gasoline Merchandise & Fountain Other Total
 
Sales $ 2,724,146 $ 748,791 $ 289,248 $ 17,761 $ 3,779,946
Gross profit $ 116,429 $ 250,040 $ 182,080 $ 17,738 $ 566,287
Margin 4.3% 33.4% 62.9% 99.9% 15.0%
 
Gasoline gallons 780,268
 
Six months ended
10/31/11
 
Sales $ 2,666,412 $ 722,987 $ 252,681 $ 14,270 $ 3,656,350
Gross profit $ 128,009 $ 234,950 $ 152,501 $ 14,240 $ 529,700
Margin 4.8% 32.5% 60.4% 99.8% 14.5%
 
Gasoline gallons     755,911                
 
                                 
Gasoline Gallons Gasoline Margin
Same-store Sales Growth (Cents per gallon, excluding credit card fees)
          Fiscal           Fiscal

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

F2013 -0.2 % -0.4 % F2013

14.9

¢

14.9

¢

F2012 -2.7 -2.9 -2.4 % 2.5 % -1.5 % F2012 17.2 16.7

13.6

¢

13.7

¢

15.3

¢

F2011   1.5     3.6     3.5     -1.9     1.6   F2011   16.4     14.9     13.9     15.6     15.2  
                             
Grocery & Other Merchandise Grocery & Other Merchandise
Same-store Sales Growth Margin
Fiscal Fiscal

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

F2013 2.6 % -0.7 % F2013 33.4 % 33.4 %
F2012 6.2 5.8 6.3 % 8.5 % 6.7 % F2012 32.5 32.5 31.8 % 33.0 % 32.5 %
F2011   2.0     6.9     5.8     4.8     4.6   F2011   32.8     32.9     30.9     32.1     32.2  
                             
Prepared Food & Fountain Prepared Food & Fountain
Same-store Sales Growth Margin
Fiscal Fiscal

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

F2013 10.6 % 10.1 % F2013 63.5 % 62.5 %
F2012 15.3 14.2 12.6 % 16.8 % 14.3 % F2012 61.2 59.5 61.2 % 60.8 % 60.7 %
F2011   2.4     7.2     10.5     11.8     7.7   F2011   63.8     62.7     62.1     60.2     62.2  
 

Corporate information is available at this Web site: http://www.caseys.com . Earnings will be reported during a conference call on December 11, 2012. The call will be broadcast live over the Internet at 9:30 a.m. CST via the Investor Relations section of our Web site and will be available in an archived format.

Copyright Business Wire 2010

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