Casey's General Stores' fiscal Q2 earnings rose 73% to US$37.6M as revenue climbed to US$1.78B from US$1.35B; CEO credits favorable gas margin, strong inside sales

ANKENY, Iowa , December 7, 2011 () – Casey’s General Stores, Inc. (Nasdaq: CASY) today reported $0.99 in basic earnings per share for the second quarter of fiscal 2012 ended October 31, 2011 compared to $0.51 for the same period a year ago. Year to date, basic earnings per share were $2.02 versus $1.27 for the same period last year. After adjusting for costs associated with the hostile takeover attempt by Alimentation Couche-Tard, Inc., basic earnings per share last year would have been $0.81 for the quarter and $1.62 year to date. We are pleased with the second quarter results, despite the continued challenges impacting our industry,” stated President and CEO Robert J. Myers. “We experienced a favorable gas margin and strong inside sales, resulting in a 15.6% increase in total gross profit.”

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 down 2.9%, adversely impacted by a 30.9% increase in retail gas prices from the same period a year ago. The favorable gasoline margin environment continued in the second quarter resulting in an average margin of 16.7 cents per gallon. “The average gasoline margin for the trailing four years is 14.2 cents per gallon,” said Myers. For the year, total gallons sold were up 6.1% to 755.9 million with an average margin of 16.9 cents, while gross profit rose 14.6%. Same-store gallons for the year were down 2.8%.

Grocery & Other Merchandise—Casey’s annual goal is to increase same-store sales 5.8% with an average margin of 32.8%. For the quarter, same-store sales rose 5.8% with an average margin of 32.5%. For the fourth consecutive quarter, the Company experienced double digit sales increases across all major areas of this category. As a result, total sales were up 15.8%. “Competitive cigarette pricing continued to impact the margin in the second quarter compared to the second quarter a year ago,” stated Myers. “However, our cigarette margin began to stabilize in the second quarter as we start to cycle against the more competitive landscape that began about a year ago.” Despite the margin pressure from cigarettes, gross profit dollars increased 14.3% for the quarter. For the six months ended October 31, 2011, same-store sales were up 6.0% with an average margin of 32.5%. Total sales for the year are up 15.5% to $723 million.

Prepared Food & Fountain—The goal for fiscal 2012 is to increase same-store sales 7.7% with an average margin of 61.8%. Same-store sales were up 14.2% for the quarter and 14.8% year to date. The average margin for the quarter was 59.5%, down from the same period a year ago, primarily due to a rise in commodity prices. “It is essential to have high quality prepared food offerings at competitive prices to meet the needs of our value oriented customer base,” said Myers. “This focus on our customers enabled us to increase sales by 20.2% and gross profit by 14.1% for the quarter, despite a decline in the margin,” said Myers. Year to date, total sales were up 20.6% to $252.7 million compared to the first six months last year, with an average margin of 60.4%.

Operating Expenses—Year to date, operating expenses increased 12.3% to $343.2 million. For the quarter, operating expenses were up 12.1%. After adjusting for the expenses associated with the unsolicited offer by Couche-Tard in the prior year, expenses increased 18.4% in the quarter and 17.8% at the six month mark. “The increase was driven primarily by operating 128 more stores this quarter and a $5.2 million increase in credit card fees 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 33 stores and completed 8 new-store constructions. “We are on pace to build approximately 30 stores by the end of the fiscal year,” said Myers. “The acquisition environment continues to be active, and we remain optimistic about our long-term opportunities.”

Dividend—At its December meeting, the Board of Directors declared a quarterly dividend of $0.15 per share. The dividend is payable February 15, 2012 to shareholders of record on February 1, 2012.

Casey’s General Stores, Inc.

Condensed Consolidated Statements of Earnings

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

(Unaudited)

 
        Three months ended October 31,       Six months ended October 31,
       

2011

   

2010

      2011     2010
Total revenue     $ 1,782,518     1,349,519     $ 3,656,350     2,711,546
Cost of goods sold (exclusive of                            
depreciation and amortization,                            
shown separately below)       1,519,600     1,122,142       3,126,650     2,250,198

Gross profit

      262,918     227,377       529,700     461,348
Operating expenses       171,832     153,263       343,248     305,649
Depreciation and amortization       23,432     20,041      

46,327

    39,604
Interest, net       8,777     8,195       17,711     10,722
Loss on early retirement of debt       -----------     11,350       -----------     11,350
Earnings before income taxes       58,877     34,528       122,414     94,023
Federal and state income taxes       21,245     12,836       45,391     35,045
Net earnings     $ 37,632     21,692     $ 77,023     58,978
                             
Earnings per common share                            
Basic     $ .99     .51     $ 2.02     1.27
Diluted     $ .98     .51     $ 2.01     1.26
Basic weighted average shares                            
outstanding       38,055,909     42,283,525       38,040,142     46,622,176

Plus effect of stock options

      342,934     287,678       328,239     263,899
Diluted weighted average shares                            
outstanding       38,398,843     42,571,203       38,368,381     46,886,075

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