Casey’s General Stores, Inc. (Nasdaq:CASY) today reported $0.51 in basic earnings per share for the second quarter of fiscal 2011 ended October 31, 2010. The results include approximately $19.4 million in expenses pertaining to the Company’s recapitalization plan completed in the second quarter as well as the unsolicited hostile offer and related actions by Alimentation Couche-Tard Inc. Without those expenses, basic earnings per share would have been $.81 compared to $0.66 for the same quarter a year ago, up 22.7%. Year to date, basic earnings per share were $1.27 versus $1.53 for the same period last year. Excluding expenses related to the hostile offer and recapitalization plan, mid-year basic earnings per share would have been $1.62. “We are pleased with the second quarter results driven by strong sales increases across all categories,” stated President and CEO Robert J. Myers. “We expect additional revenue growth as we close on more acquisitions during the third quarter.”

Gasoline – The Company’s annual goal is to increase same-store gasoline gallons sold 1% with an average margin of 13.5 cents per gallon. For the second quarter, same-store gallons sold were up 3.6% with an average margin of 14.9 cents per gallon. “We anticipate the favorable gasoline environment to continue throughout the 3 rd quarter,” said Myers. Same-store gallons sold for the year increased 2.5% with an average margin of 15.7 cents, while gross profit rose nearly 13%. For the year, total gallons sold were up 8% to 712.1 million.

Grocery & Other Merchandise – Casey’s annual goal is to increase same-store sales 6% with an average margin of 33.9%. For the quarter, same-store sales rose 6.9% with an average margin of 32.9%. For the six months ended October 31, 2010, same-store sales were up 4.2% with an average margin of 32.9%. “More favorable weather and increased promotional initiatives helped drive sales during the second quarter,” stated Myers. “Competitive cigarette pricing continued in the second quarter, putting pressure on the margin. However, we were pleased with the overall gain in gross profit dollars.” Total sales for the year are up 9.2% to $626.1 million.

Prepared Food & Fountain – The goal for fiscal 2011 is to increase same-store sales 8.9% with an average margin of 63.1%. Same-store sales were up 7.2% for the quarter and 4.8% year to date. The average margin for the quarter was 62.7%; down from a record high margin in the same period a year ago primarily due to a rise in commodity prices. “We benefited from value-oriented promotions throughout the quarter driving total sales by 13% and increasing gross profit 9.6%,” said Myers. “Despite the challenging economy, we are encouraged by the continued strong performance of this category.” Year to date, total sales were up 10.3% to $209.6 million compared to $190 million with an average margin of 63.2%.

Operating Expenses – For the quarter, operating expenses increased 17% to $153.3 million. Excluding expenses associated with the unsolicited hostile offer by Couche-Tard, expenses increased 10.8%. “The increase was driven by a $2.5 million increase in credit card fees and expenses associated with operating more stores this quarter compared to the same period a year ago,” stated Myers.

Expansion – The annual goal is to increase the total number of stores 4-6%. At the mid-year point, the Company had acquired 10 stores and completed 8 new-store constructions. “We anticipate completing 74 more acquisitions during the third fiscal quarter and remain optimistic about our long-term opportunities,” said Myers. “In addition to acquisitions, we are on pace to build a total of 20 new stores and replace 15 stores by the end of the fiscal year.” The Company also completed 12 major remodels during the first six months of the year.

Dividend – At its December meeting, the Board of Directors declared a quarterly dividend of $0.135 per share. The dividend is payable February 15, 2011 to shareholders of record on February 1, 2011.
                   
Casey’s General Stores, Inc.
Condensed Consolidated Statements of Earnings

(Dollars in thousands, except per share amounts)

(Unaudited)
 

Three months ended October 31,

Six months ended October 31,
2010 2009 2010 2009
Total revenue $ 1,349,519 $ 1,154,964 $ 2,711,546 $ 2,342,904
Cost of goods sold (exclusive of
depreciation and amortization,
shown separately below) 1,122,142 948,600 2,250,198 1,916,415
Gross profit 227,377 206,364 461,348 426,489
Operating expenses 153,263 131,013 305,649 263,371
Depreciation and amortization 20,041 18,527 39,604 36,478
Interest, net 8,195 2,707 10,722 5,411
Loss on early retirement of debt 11,350 ---------- 11,350 ----------
Earnings before income taxes 34,528 54,117 94,023 121,229
Federal and state income taxes 12,836 20,525 35,045 43,444
Net earnings $ 21,692 $ 33,592 $ 58,978 $ 77,785
 
Earnings per common share
 
Basic $ .51 $ .66 $ 1.27 $ 1.53
 
Diluted $ .51 $ .66 $ 1.26 $ 1.52
 
 
Basic weighted average shares
outstanding 42,283,525 50,899,179 46,622,176 50,881,379
Plus effect of stock options 287,678 155,107 263,899 137,702
Diluted weighted average shares
outstanding 42,571,203 51,054,286 46,886,075 51,019,081
 
       
Casey’s General Stores, Inc.
Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

October 31,

April 30,
2010 2010
Assets
Current assets
Cash and cash equivalents $ 188,267 $ 151,676
Receivables 15,329 12,111
Inventories 122,348 124,951
Prepaid expenses 1,739 1,129
Deferred income taxes 10,977 9,417
Income taxes receivable 10,425 10,801
Total current assets       349,085       310,085
Other assets, net of amortization 10,794 10,232
Goodwill 68,260 57,547
Property and equipment, net of
accumulated depreciation of $743,560 at
October 31, 2010, and of $706,994 at April 30, 2010 1,075,364 1,010,911
Total assets     $ 1,503,503     $ 1,388,775
 
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 5,274 $ 24,577
Accounts payable 174,232 145,334
Accrued expenses 80,481 70,975
Total current liabilities       259,987       240,886
Long-term debt, net of current maturities 679,159 154,754
Deferred income taxes 158,440 141,229
Deferred compensation 13,309 12,788
Other long-term liabilities 15,887 14,799
Total liabilities 1,126,782 564,456
 
Total shareholders' equity 376,721 824,319
   
Total liabilities and shareholders' equity     $ 1,503,503     $ 1,388,775
 

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       Gasoline     Grocery & Other     Prepared Food     Other     Total
10/31/10 Merchandise & Fountain
 
Sales $ 1,864,270 $ 626,106 $ 209,565 $ 11,605 $ 2,711,546
Gross profit $ 111,661 $ 205,680 $ 132,431 $ 11,576 $ 461,348
Margin 6.0 % 32.9 % 63.2 % 99.8 % 17.0 %
Gasoline gallons 712,117
 
Six months ended
10/31/09
 
Sales $ 1,569,749 $ 573,530 $ 190,037 $ 9,588 $ 2,342,904
Gross profit $ 98,873 $ 196,101 $ 121,957 $ 9,558 $ 426,489
Margin 6.3 % 34.2 % 64.2 % 99.7 % 18.2 %
Gasoline gallons         659,521                          
 
           
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
F2011 1.5 % 3.6 % F2011 16.4¢ 14.9¢
F2010 3.2 -0.7 -2.9 % 0.2 % -0.1 % F2010 15.7 14.3 12.4¢ 13.1¢ 13.9¢
F2009     0.5       0.2       2.1       1.2       1.0   F2009     15.6       13.7       9.9       12.1       12.9  
   
Grocery & Other Merchandise Grocery & Other Merchandise
Same-store Sales Growth Margin
Fiscal Fiscal
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
F2011 2.0 % 6.9 % F2011 32.8 % 32.9 %
F2010 6.4 1.9 1.7 % 3.1 % 3.3 % F2010 34.3 34.1 32.7 % 33.1 % 33.6 %
F2009     4.7       4.9       6.5       8.0       5.9   F2009     34.0       33.9       32.9 %     33.7       33.7  
   
Prepared Food & Fountain Prepared Food & Fountain
Same-store Sales Growth Margin
Fiscal Fiscal
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
F2011 2.4 % 7.2 % F2010 63.8 % 62.7 %
F2010 6.6 3.4 1.4 % 5.3 % 4.2 % F2010 63.8 64.6 62.8 % 64.1 % 63.8 %
F2009     12.3       9.3       8.1       7.2       9.1   F2009     60.5       60.6       61.8       62.7       61.4  
 

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