September 14, 2023
(press release)
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ANKENY, Iowa--(BUSINESS WIRE)-- 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 “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. 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. Fuel 2 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. 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 23,953 Other, net 1,104 1,867 Net cash provided by operating activities 229,131 276,206 Cash flows from investing activities: Purchase of property and equipment (68,903 ) (82,070 ) Payments for acquisition of businesses, net of cash acquired (13,297 ) (1,065 ) Proceeds from sales of assets 5,784 5,019 Net cash used in investing activities (76,416 ) (78,116 ) Cash flows from financing activities: Payments of long-term debt (29,665 ) (15,998 ) Payments of cash dividends (14,945 ) (13,128 ) Repurchase of common stock (29,893 ) — Tax withholdings on employee share-based awards (17,969 ) (15,478 ) Net cash used in financing activities (92,472 ) (44,604 ) Net increase in cash and cash equivalents 60,243 153,486 Cash and cash equivalents at beginning of the period 378,869 158,878 Cash and cash equivalents at end of the period $ 439,112 $ 312,364 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Three months ended July 31, 2023 2022 Cash paid during the period for: Interest, net of amount capitalized $ 10,701 $ 8,689 Income taxes, net — — Noncash investing and financing activities: Purchased property and equipment in accounts payable 42,188 42,008 Right-of-use assets obtained in exchange for new finance lease liabilities 8,345 736 Right-of-use assets obtained in exchange for new operating lease liabilities 2,214 — Summary by Category (Amounts in thousands) Three months ended July 31, 2023 Fuel Grocery & General Merchandise Prepared Food & Dispensed Beverage Other Total Revenue $ 2,427,333 $ 996,936 $ 372,813 $ 72,169 $ 3,869,251 Gross profit $ 296,978 $ 339,573 $ 216,861 $ 24,342 $ 877,754 12.2 % 34.1 % 58.2 % 33.7 % 22.7 % Fuel gallons sold 713,991 Three months ended July 31, 2022 Revenue $ 3,096,342 $ 923,064 $ 343,553 $ 91,685 $ 4,454,644 Gross profit $ 308,188 $ 313,307 $ 190,953 $ 23,802 $ 836,250 10.0 % 33.9 % 55.6 % 26.0 % 18.8 % Fuel gallons sold 689,467 Fuel Gallons Fuel Margin Same-store Sales (Cents per gallon, excluding credit card fees) Q1 Q2 Q3 Q4 Fiscal Year Q1 Q2 Q3 Q4 Fiscal Year F2024 0.4 % F2024 41.6 ¢ F2023 (2.3 ) 0.3 % (0.5 )% — % (0.8 )% F2023 44.7 40.5 ¢ 40.7 ¢ 34.6 ¢ 40.2 ¢ F2022 9.0 2.5 5.7 1.5 4.4 F2022 35.1 34.7 38.3 36.2 36.0 Grocery & General Merchandise Grocery & General Merchandise Same-store Sales Margin Q1 Q2 Q3 Q4 Fiscal Year Q1 Q2 Q3 Q4 Fiscal Year F2024 5.2 % F2024 34.1 % F2023 5.5 6.9 % 5.8 % 7.1 % 6.3 % F2023 33.9 33.3 % 34.0 % 33.0 % 33.6 % F2022 7.0 6.8 7.7 4.3 6.3 F2022 33.0 33.3 32.0 32.5 32.7 Prepared Food & Dispensed Beverage Prepared Food & Dispensed Beverage Same-store Sales Margin Q1 Q2 Q3 Q4 Fiscal Year Q1 Q2 Q3 Q4 Fiscal Year F2024 5.9 % F2024 58.2 % F2023 8.4 10.5 % 5.0 % 4.9 % 7.1 % F2023 55.6 56.7 % 57.3 % 56.8 % 56.6 % F2022 10.8 4.1 7.4 7.6 7.4 F2022 61.0 60.6 58.0 56.9 59.2 RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by the Company for internal purposes including our capital budgeting process, evaluating acquisition targets, assessing performance, and awarding incentive compensation. Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies. The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended July 31, 2023 and 2022: (in thousands) Three Months Ended July 31, 2023 2022 Net income $ 169,237 $ 152,932 Interest, net 12,495 13,816 Federal and state income taxes 52,262 49,936 Depreciation and amortization 82,905 76,295 EBITDA 316,899 292,979 (Gain) loss on disposal of assets and impairment charges (1,448 ) 230 Adjusted EBITDA $ 315,451 $ 293,209 NOTES: This release contains statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to expectations for future periods, possible or assumed future results of operations, financial conditions, liquidity and related sources or needs, business and/or integration strategies, plans and synergies, supply chain, growth opportunities, performance at our stores. There are a number of known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any results expressed or implied by these forward-looking statements, including but not limited to the execution of our strategic plan, the integration and financial performance of acquired stores, wholesale fuel, inventory and ingredient costs, distribution challenges and disruptions, the impact and duration of the conflict in Ukraine or other geopolitical disruptions, as well as other risks, uncertainties and factors which are described in the Company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission and available on our website. Any forward-looking statements contained in this release represent our current views as of the date of this release with respect to future events, and Casey’s disclaims any intention or obligation to update or revise any forward-looking statements in the release whether as a result of new information, future events, or otherwise. Corporate information is available at this website: https://www.caseys.com. Earnings will be reported during a conference call on September 12, 2023. The call will be broadcast live over the Internet at 7:30 a.m. CST. To access the call, go to the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx" target="_blank" >https://investor.caseys.com/events-and-presentations/default.aspx. No access code is required. A webcast replay of the call will remain available in an archived format on the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx" target="_blank" >https://investor.caseys.com/events-and-presentations/default.aspx for one year after the call. Investor Relations Contact: Media Relations Contact:
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Brian Johnson (515) 965-6587
Katie Petru (515) 446-6772
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