Casey’s General Stores, Inc. ("Casey's" or the "Company") (Nasdaq: CASY) one of the leading convenience store chains in the United States, today announced financial results for the three months ended July 31, 2023.
First Quarter Key Highlights
- Diluted EPS of $4.52, up 11% from the same period a year ago.
- Inside same-store sales increased 5.4% compared to prior year, and 12.1% on a two-year stack basis, with an inside margin of 40.6%. Total inside gross profit increased 10.3% to $556.4 million compared to the prior year.
- Same-store fuel gallons were up 0.4% compared to prior year with a fuel margin of 41.6 cents per gallon. Total fuel gross profit decreased 3.6% to $297.0 million compared to the prior year.
- Same-store operating expense excluding credit card fees were up 3.4%, favorably impacted by a 3% reduction in same-store labor hours.
- Casey's currently has 125 stores under agreement to acquire, including 63 stores previously announced from EG Group Ltd.
“Our team is off to a great start on our three-year strategic plan, highlighted by an 11% increase in diluted EPS,” said Darren Rebelez, Chairman, President and CEO. “With a more normalized macro operating environment in the quarter, the strength of Casey's unique business model was on full display. Inside same-store sales were strong, driven by whole pizza pies and the successful launch of Casey's Thin Crust Pizza. The fuel team continues to do an excellent job striking the right balance between gallon growth and gross profit margin, as evidenced by fuel margin of 41.6 cents per gallon while growing same-store gallons. Finally, I am very proud of our team's ability to effectively manage operating expenses as we continue to prioritize simplification and efficiency inside our stores.”
Earnings
Three Months Ended July 31, | |||||
2023 | 2022 | ||||
Net income (in thousands) | $ | 169,237 | $ | 152,932 | |
Diluted earnings per share | $ | 4.52 | $ | 4.09 | |
Adjusted EBITDA (in thousands)1 | $ | 315,451 | $ | 293,209 |
Net income, diluted EPS, and Adjusted EBITDA (reconciled later in the document), were up compared to the same period a year ago primarily due to higher profitability inside the store partially offset by lower fuel margin and higher operating expenses due to operating 82 additional stores.
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1 EBITDA and Adjusted EBITDA are reconciled later in the document |
Inside
Three Months Ended July 31, | |||||||
2023 | 2022 | ||||||
Inside sales (in thousands) | $ | 1,369,749 | $ | 1,266,617 | |||
Inside same-store sales | 5.4 | % | 6.3 | % | |||
Grocery and general merchandise same-store sales | 5.2 | % | 5.5 | % | |||
Prepared food and dispensed beverage same-store sales | 5.9 | % | 8.4 | % | |||
Inside gross profit (in thousands) | $ | 556,434 | $ | 504,260 | |||
Inside margin | 40.6 | % | 39.8 | % | |||
Grocery and general merchandise margin | 34.1 | % | 33.9 | % | |||
Prepared food and dispensed beverage margin | 58.2 | % | 55.6 | % |
Total inside sales were up 8.1% for the quarter driven by strong performance in the prepared food and dispensed beverage category, including whole pizza pies, hot sandwiches and donuts as well as non-alcoholic and alcoholic beverages, snacks and candy in the grocery and general merchandise category. Inside margin was up 80 basis points compared to the same quarter a year ago, primarily due to softening of prepared food and dispensed beverage ingredient costs as well as increased penetration of private label products.
Fuel2
Three Months Ended July 31, | |||||||
2023 | 2022 | ||||||
Fuel gallons sold (in thousands) | 713,991 | 689,467 | |||||
Same-store gallons sold | 0.4 | % | (2.3 | )% | |||
Fuel gross profit (in thousands) | $ | 296,978 | $ | 308,188 | |||
Fuel margin (cents per gallon, excluding credit card fees) | 41.6 | ¢ | 44.7 | ¢ |
Total fuel gallons sold increased 3.6% compared to the prior year primarily due to the store count increase; also contributing were same-store gallons sold 0.4% versus the prior year. The Company’s total fuel gross profit was down 3.6% versus the prior year, as we lapped record high fuel margins last year. The Company sold $20.2 million in renewable fuel credits (RINs) in the first quarter, an increase of $2.5 million from the same quarter in the prior year.
Operating Expenses
Three Months Ended July 31, | |||||||
2023 | 2022 | ||||||
Operating expenses (in thousands) | $ | 560,855 | $ | 543,271 | |||
Credit card fees (in thousands) | $ | 60,985 | $ | 67,277 | |||
Same-store operating expense excluding credit card fees | 3.4 | % | 2.6 | % |
Operating expenses increased 3.2% during the first quarter. Nearly 3% of the increase is due to operating 82 more stores than prior year. Credit card fees decreased approximately $6 million due to lower retail fuel price which offset all remaining operating expense increases. Same-store employee expense was approximately flat, as the increase in wage rate was nearly offset by the reduction in same-store hours.
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2 Fuel category does not include wholesale fuel activity, which is included in Other. |
Expansion
Store Count | ||
April 30, 2023 | 2,521 | |
New store construction | 10 | |
Acquisitions | 4 | |
Acquisitions not opened | (2 | ) |
Prior acquisitions opened | 4 | |
Closed | (1 | ) |
July 31, 2023 | 2,536 |
Liquidity
At July 31, 2023, the Company had approximately $1.3 billion in available liquidity, consisting of approximately $439 million in cash and cash equivalents on hand and $900 million in available borrowing capacity on existing lines of credit.
Share Repurchase
During the first quarter, the Company repurchased shares for approximately $30 million. The Company has $370 million remaining under its existing share repurchase authorization.
Dividend
At its September meeting, the Board of Directors voted to pay a quarterly dividend of $0.43 per share. The dividend is payable November 15, 2023 to shareholders of record on November 1, 2023.
Fiscal 2024 Outlook
Casey's is updating its fiscal 2024 outlook as a result of the pending transactions and now expects to add at least 150 stores in fiscal 2024.
The Company is not updating its outlook for the following metrics. Casey’s currently expects inside same-store sales to increase 3% to 5%. We expect inside margin improvement to approximately 40% to 41%. The Company expects same-store fuel gallons sold to be between negative 1% to positive 1%. Total operating expenses are expected to increase approximately 5% to 7%. Net interest expense is expected to be approximately $55 million. Depreciation and amortization is expected to be approximately $340 million and the purchase of property and equipment is expected to be $500 to $550 million The tax rate is expected to be approximately 24% to 26% for the year.
Casey’s General Stores, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Dollars in thousands, except share and per share amounts) (Unaudited) | |||||
Three Months Ended July 31, | |||||
2023 | 2022 | ||||
Total revenue | $ | 3,869,251 | $ | 4,454,644 | |
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) | 2,991,497 | 3,618,394 | |||
Operating expenses | 560,855 | 543,271 | |||
Depreciation and amortization | 82,905 | 76,295 | |||
Interest, net | 12,495 | 13,816 | |||
Income before income taxes | 221,499 | 202,868 | |||
Federal and state income taxes | 52,262 | 49,936 | |||
Net income | $ | 169,237 | $ | 152,932 | |
Net income per common share | |||||
Basic | $ | 4.54 | $ | 4.11 | |
Diluted | $ | 4.52 | $ | 4.09 | |
Basic weighted average shares | 37,300,952 | 37,222,943 | |||
Plus effect of stock compensation | 155,187 | 186,762 | |||
Diluted weighted average shares | 37,456,139 | 37,409,705 |
Casey’s General Stores, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) | |||||
July 31, 2023 | April 30, 2023 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 439,112 | $ | 378,869 | |
Receivables | 133,726 | 120,547 | |||
Inventories | 424,728 | 376,085 | |||
Prepaid expenses | 24,625 | 22,107 | |||
Income taxes receivable | — | 23,347 | |||
Total current assets | 1,022,191 | 920,955 | |||
Other assets, net of amortization | 191,900 | 192,153 | |||
Goodwill | 618,477 | 615,342 | |||
Property and equipment, net of accumulated depreciation of $2,694,571 at July 31, 2023 and $2,620,149 at April 30, 2023 | 4,229,784 | 4,214,820 | |||
Total assets | $ | 6,062,352 | $ | 5,943,270 | |
Liabilities and Shareholders’ Equity | |||||
Current liabilities | |||||
Current maturities of long-term debt and finance lease obligations | $ | 53,640 | $ | 52,861 | |
Accounts payable | 570,485 | 560,546 | |||
Accrued expenses | 294,873 | 313,718 | |||
Income taxes payable | 15,001 | — | |||
Total current liabilities | 933,999 | 927,125 | |||
Long-term debt and finance lease obligations, net of current maturities | 1,598,524 | 1,620,513 | |||
Deferred income taxes | 559,493 | 543,598 | |||
Insurance accruals, net of current portion | 32,070 | 32,312 | |||
Other long-term liabilities | 161,971 | 159,056 | |||
Total liabilities | 3,286,057 | 3,282,604 | |||
Total shareholders’ equity | 2,776,295 | 2,660,666 | |||
Total liabilities and shareholders’ equity | $ | 6,062,352 | $ | 5,943,270 |
Casey’s General Stores, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) | |||||||
Three months ended July 31, | |||||||
2023 | 2022 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 169,237 | $ | 152,932 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 82,905 | 76,295 | |||||
Amortization of debt issuance costs | 278 | 345 | |||||
Share-based compensation | 10,468 | 16,185 | |||||
(Gain) loss on disposal of assets and impairment charges | (1,448 | ) | 230 | ||||
Deferred income taxes | 15,895 | 24,727 | |||||
Changes in assets and liabilities: | |||||||
Receivables | (13,179 | ) | (37,859 | ) | |||
Inventories | (48,256 | ) | (2,899 | ) | |||
Prepaid expenses | (2,518 | ) | (6,504 | ) | |||
Accounts payable | (4,344 | ) | 34,799 | ||||
Accrued expenses | (20,150 | ) | (7,865 | ) | |||
Income taxes | 39,139 |