Casey's General Stores, Inc. (CASY, Financial) headquartered in Ankeny, Iowa, owns and operates over 1,900 convenience stores in 14 Midwestern states. The stores offer self-service gasoline, a wide variety of grocery items, and prepared foods, such as made-from-scratch pizza and donuts, chicken tenders, and sandwiches. Casey's operates its own distribution centers, delivering approximately 90% of in-store products. The company currently has approximately 850 stores operating 24 hours a day.
The company reported record fourth quarter results. The company opened its second distribution center in Terre Haute, Indiana, and launched a mobile app. It also rolled out on-line ordering across all its stores. The same-store sales continued on an industry-leading pace and, along with strong fuel margins, enabled the company to achieve record earnings.
Fourth quarter results
The company reported diluted earnings per share of $1.19 for the fourth quarter, which was $1.05 during the prior year quarter.
For the full year, diluted earnings per share increased by 24% and were $5.73, which was $4.62 during the prior year quarter.
Total gross profit increased by 12% for the year.
Fuel:Â For the year, same-store gallons sales increased by 3%. It had an average margin of 19.6 cents per gallon. For the quarter, same-store gallons increased by 4.6% and had an average margin of 17.8 cents per gallon.
The company sold 12.7 million renewable fuel credits for $9.1 million in the fourth quarter. For fiscal 2016, total gallons sold increased by 7.4% and was 2 billion.
Gross profit increased by 8.7% and was $381.7 million. The company plans to increase same-store gallons sold 2% with an average margin of 16.7 cents per gallon.
The company declared a quarterly dividend of 24 cents per share. The dividend is payable Aug. 15 to shareholders of record on Aug. 1.
Grocery and other merchandise:Â For the year, same-store sales increased by 7.1%. It had an average margin of 31.9%. During the quarter, same-store sales increased by 7.4% and had an average margin of 32.1%. For the year, total sales increased by 10% and were $2 billion.
Prepared Food and Fountain:Â For the year, same-store sales increased by 8.4% with an average margin of 62.5%.
For the fourth quarter, same-store sales increased by 8.2% with an average margin of 61.9%. For fiscal 2016, total sales increased by 12.8% and were $880.7 million.
Gross profit dollars increased by 18.1% and were $550.3 million.
Operating expenses:Â For the fiscal year, operating expenses increased by 9.7% and was $1.1 billion. During the fourth quarter, operating expenses increased by 12.9%.
Expectations for fiscal 2017 (Source: Company website):
- Increase same-store fuel gallons sold 2% with an average margin of 18.4 cents per gallon.
- Increase same-store grocery and other merchandise sales 6.2% with an average margin of 32%.
- Increase same-store prepared food and fountain sales 10.2% with an average margin of 62.5%.
- Build or acquire 77 to 116 stores, replace 35 existing locations, and complete 100 major remodels.
Recent developments:
- The company recently finished a 40,000 square foot addition to the distribution center in Ankeny, Iowa.
- It also opened a second distribution center in Terre Haute, Indiana.
Strong attributes of the company:
- Long-term business strategy.
- Combination of competitively priced fuel.
- High quality prepared food offerings.
- Clean well-maintained stores.
- Cigarette sales performed exceptionally well throughout fiscal 2015.
- Improving performance of stores constructed in newer states: Arkansas, Kentucky, Tennessee.
On a concluding note
The company is well-positioned for continued strong performance in fiscal 2017. Fiscal 2015 proved to be another successful year for the company. The company had a 20% increase in its stock price throughout the fiscal year, and a 113% increase over the last five fiscal years. The projects will enable it to access to new markets. The company implemented several operational initiatives over the past few fiscal years. The company’s disciplined growth strategy will pay in the near future. Casey's is doing well now and investors may add this company to their portfolio.
Disclosure: I do not hold any position in the company.
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