Casey's Posts Record Second Quarter Results and Raises Dividend

December 7, 2020

ANKENY, Iowa--(BUSINESS WIRE)-- Casey’s General Stores, Inc. ("Casey's" or the "Company") (Nasdaq symbol CASY) one of the leading convenience store chains in the United States, today announced financial results for the three and six months ended October 31, 2020.

Second Quarter Key Highlights

  • Diluted earnings per share of $3.00 compared to $2.21 for the same period a year ago, an increase of 36%.
  • Fuel gross profit increased 45% with a fuel margin of 35.3 cents per gallon. Same-store gallons sold decreased 8.6% compared to prior year but improved sequentially from first quarter.
  • Inside same-store sales increased 3.5% with a margin of 41.0%, inside gross profit increased 2.8%.
  • Digital sales increased 127% compared to prior year. Casey’s Rewards recently exceeded 3 million members.
  • The Board of Directors increased the dividend to $0.34 per share, an increase of 6%.
  • Buchanan Energy acquisition expected to close in December.

“Casey’s had a remarkable second quarter and is well on our way to executing our long-term strategic plan,” said President and CEO Darren Rebelez. “The Company delivered well-balanced financial results, with contributions from both ongoing strong fuel profitability and inside sales volume and profit improvements. Casey’s also recently announced an agreement for the largest acquisition in the Company’s history, the 94-store Bucky’s chain located primarily in Illinois and Nebraska. Finally, the Board's decision to raise the dividend is a sign of continuing confidence in the Company’s ability to achieve strong financial results and maintain our already excellent financial flexibility in both the short and long term.”

Earnings

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2020

 

2019

 

2020

 

2019

Net income (in thousands)

$

111,983

 

$

81,981

 

$

232,575

 

$

167,796

Diluted earnings per share

$

3.00

 

$

2.21

 

$

6.24

 

$

4.52

Adjusted EBITDA (in thousands)

$

223,231

 

$

184,412

 

$

460,986

 

$

370,784

Net income, diluted EPS, and Adjusted EBITDA (reconciled later in the document) in the second quarter were significantly greater than prior year due to higher fuel margin and inside gross profit, as well as operating 38 more stores than this time last year.

Fuel

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2020

 

2019

 

2020

 

2019

Fuel gallons sold (in thousands)

577,581

 

 

614,071

 

 

1,127,089

 

 

1,233,155

 

Same-store gallons sold decrease

(8.6)

%

 

(1.8)

%

 

(11.7)

%

 

(2.0)

%

Fuel gross profit (in thousands)

$

204,154

 

 

$

140,798

 

 

$

414,184

 

 

$

291,787

 

Fuel margin (cents per gallon, excluding credit card fees)

35.3

¢

 

22.9

¢

 

36.7

¢

 

23.7

¢

 

Same-store gallons sold were adversely impacted by lower guest traffic due to the COVID-19 pandemic, though volumes improved from first quarter. Fuel gross profit benefited from a higher fuel margin driven in part by the Company's centralized retail pricing capability and procurement initiatives. The Company sold $3.8 million in renewable fuel credits in the second quarter, comparable to the prior year.

Inside

 

Three Months Ended October 31,

Six Months Ended October 31,

 

2020

 

2019

2020

 

2019

Inside sales (in thousands)

$

1,007,048

 

 

$

958,408

 

$

2,009,675

 

 

$

1,942,203

 

Inside same-store sales increase

3.5

%

 

2.8

%

1.5

%

 

2.7

%

Grocery and other merchandise same-store sales increase

6.6

%

 

3.2

%

5.0

%

 

3.1

%

Prepared food and fountain same-store sales (decrease) increase

(3.6)

%

 

1.9

%

(6.6)

%

 

1.8

%

Inside gross profit (in thousands)

$

412,653

 

 

$

401,586

 

$

809,900

 

 

$

801,051

 

Inside margin

41.0

%

 

41.9

%

40.3

%

 

41.2

%

Grocery and other merchandise margin

33.3

%

 

33.3

%

32.7

%

 

32.3

%

Prepared food and fountain margin

60.1

%

 

60.9

%

59.9

%

 

61.6

%

Inside same-store sales were driven by strong performance in alcohol, packaged beverage and tobacco, along with continued strength in whole pizza pie sales. This was offset by pressure in the dispensed beverage and bakery categories, though these categories experienced improvements in volume compared to first quarter. Inside sales margin was adversely impacted by the product mix shift from the sales performance noted, but improved sequentially versus first quarter.

Operating Expenses

 

Three Months Ended October 31,

Six Months Ended October 31,

 

2020

 

2019

2020

 

2019

Operating expenses (in thousands)

$

410,348

 

 

$

373,383

 

$

796,436

 

 

$

753,224

 

Credit card fees (in thousands)

$

38,529

 

 

$

38,705

 

$

74,020

 

 

$

79,087

 

Same-store operating expense excluding credit card fees increase (decrease)

5.4

%

 

3.4

%

(0.1)

%

 

3.0

%

Operating expenses for the quarter were up primarily due to operating 38 more stores than this time last year, as well as incurring $5 million in COVID-related expenses and over $9 million in incremental short and long-term incentive compensation costs due to the strong performance of the Company. Store operating hours were nearly in-line with pre-COVID levels at quarter end.

Expansion

 

Store Count

Stores at 4/30/2020

2,207

New store construction

14

Prior acquisitions opened

1

Closed

(3)

Stores at 10/31/2020

2,219

Casey’s is on track to close on the previously disclosed 94-store Bucky’s acquisition by the end of the calendar year. The acquisition is a strong strategic fit and is expected to be accretive to earnings in fiscal 2022. In addition, the Company expects to complete the construction of approximately 40 new stores this fiscal year.

Liquidity

At October 31, the Company had approximately $730 million in available liquidity, consisting of approximately $405 million in cash and cash equivalents on hand and $325 million in borrowing capacity on existing lines of credit. The Company intends to finance the Bucky’s acquisition with existing cash on hand, a new bank term loan with a 5-year maturity, and a temporary draw on its line of credit.

Share Repurchase

The Company has $300 million remaining under its existing share repurchase program. There were no repurchases made against that authorization in the second quarter.

Dividend

At its December meeting, the Board of Directors voted to increase the quarterly dividend 6% to $0.34 per share. The dividend is payable February 15, 2021 to shareholders of record on February 1, 2021.

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 October 31,

Six Months Ended October 31,

 

2020

 

2019

2020

 

2019

Total revenue

$

2,215,905

 

$

2,487,586

$

4,320,926

 

$

5,114,215

Cost of goods sold (exclusive of depreciation and amortization, shown separately below)

1,584,145

 

1,930,521

3,065,663

 

3,991,464

Operating expenses

410,348

 

373,383

796,436

 

753,224

Depreciation and amortization

64,294

 

62,888

130,114

 

122,696

Interest, net

10,634

 

12,683

24,041

 

26,404

Income before income taxes

146,484

 

108,111

304,672

 

220,427

Federal and state income taxes

34,501

 

26,130

72,097

 

52,631

Net income

$

111,983

 

$

81,981

$

232,575

 

$

167,796

Net income per common share

 

 

 

 

 

 

Basic

$

3.02

 

$

2.22

$

6.29

 

$

4.55

Diluted

$

3.00

 

$

2.21

$

6.24

 

$

4.52

Basic weighted average shares

37,030,921

 

36,916,937

37,002,901

 

36,891,324

Plus effect of stock compensation

245,962

 

219,248

245,749

 

218,189

Diluted weighted average shares

37,276,883

 

37,136,185

37,248,650

 

37,109,513

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

 

October 31, 2020

 

April 30, 2020

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

404,685

 

$

78,275

Receivables

56,109

 

48,500

Inventories

249,842

 

236,007

Prepaid expenses

18,182

 

9,801

Income taxes receivable

 

14,667

Total current assets

728,818

 

387,250

Other assets, net of amortization

72,198

 

71,766

Goodwill

161,075

 

161,075

Property and equipment, net of accumulated depreciation of $2,104,012 at October 31, 2020 and $2,037,708 at April 30, 2020

3,361,577

 

3,323,801

Total assets

$

4,323,668

 

$

3,943,892

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities

 

 

 

Lines of credit

$

 

$

120,000

Current maturities of long-term debt and finance lease obligations

2,297

 

570,280

Accounts payable

323,662

 

184,800

Accrued expenses

229,311

 

188,348

Income taxes payable

6,739

 

Total current liabilities

562,009

 

1,063,428

Long-term debt and finance lease obligations, net of current maturities

1,361,925

 

714,502

Deferred income taxes

451,205

 

435,598

Deferred compensation

14,365

 

13,604

Insurance accruals, net of current portion

20,924

 

22,862

Other long-term liabilities

53,389

 

50,693

Total liabilities

2,463,817

 

2,300,687

Total shareholders’ equity

1,859,851

 

1,643,205

Total liabilities and shareholders’ equity

$

4,323,668

 

$

3,943,892

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

 

Six months ended October 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

 

232,575

 

 

$

 

167,796

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

130,114

 

 

 

122,696

 

Share-based compensation

 

14,492

 

 

 

9,922

 

Loss on disposal of assets and impairment charges

 

2,159

 

 

 

1,257

 

Deferred income taxes

 

15,607

 

 

 

31,483

 

Changes in assets and liabilities:

 

 

 

Receivables

 

(7,609

)

 

 

(6,919

)

Inventories

 

(13,835

)

 

 

1,912

 

Prepaid expenses

 

(8,381

)

 

 

(6,290

)

Accounts payable

 

125,719

 

 

 

(9,577

)

Accrued expenses

 

39,177

 

 

 

(8,706

)

Income taxes

 

22,924

 

 

 

9,475

 

Other, net

 

(985

)

 

 

(1,640

)

Net cash provided by operating activities

 

551,957

 

 

 

311,409

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(158,815

)

 

 

(242,173

)

Payments for acquisition of businesses, net of cash acquired

 

 

 

 

(6,191

)

Proceeds from sales of property and equipment

 

2,667

 

 

 

2,940

 

Net cash used in investing activities

 

(156,148

)

 

 

(245,424

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

 

650,000

 

 

 

 

Repayments of long-term debt

 

(570,738

)

 

 

(8,682

)

Net payments of short-term debt

 

(120,000

)

 

 

(50,000

)

Proceeds from exercise of stock options

 

1,253

 

 

 

2,307

 

Proceeds from capital grant

 

1,594

 

 

 

 

Payments of cash dividends

 

(23,591

)

 

 

(22,405

)

Tax withholdings on employee share-based awards

 

(7,917

)

 

 

(6,525

)

Net cash used in financing activities

 

(69,399

)

 

 

(85,305

)

Net increase (decrease) in cash and cash equivalents

326,410

(19,320

)

Cash and cash equivalents at beginning of the period

 

78,275

 

63,296

Cash and cash equivalents at end of the period

$

404,685

$

43,976

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

Six months ended October 31,

 

2020

 

2019

Cash paid during the period for:

 

 

 

Interest, net of amount capitalized

$

26,535

 

$

26,997

Income taxes, net

31,956

 

10,000

Noncash investing and financing activities:

 

 

 

Purchased property and equipment in accounts payable

18,471

 

17,067

Right-of-use assets obtained in exchange for new finance lease liabilities

 

831

Right-of-use assets obtained in exchange for new operating lease liabilities

1,109

 

Non-cash additions from adoption of ASC 842

 

22,635

Summary by Category (Amounts in thousands)

Three months ended 10/31/2020

Fuel

 

Grocery &
Other

Merchandise

 

Prepared Food
& Fountain

 

Other

 

Total

Revenue

$

1,193,491

 

 

$

718,226

 

 

$

288,822

 

 

$

15,366

 

 

$

2,215,905

 

Gross profit

$

204,154

 

 

$

238,992

 

 

$

173,661

 

 

$

14,953

 

 

$

631,760

 

 

17.1

%

 

33.3

%

 

60.1

%

 

97.3

%

 

28.5

%

Fuel gallons sold

577,581

 

 

 

 

 

 

 

 

 

Three months ended 10/31/2019

 

 

 

 

 

 

 

 

 

Revenue

$

1,514,474

 

 

$

660,562

 

 

$

297,846

 

 

$

14,704

 

 

$

2,487,586

 

Gross profit

$

140,798

 

 

$

220,134

 

 

$

181,452

 

 

$

14,681

 

 

$

557,065

 

 

9.3

%

 

33.3

%

 

60.9

%

 

99.8

%

 

22.4

%

Fuel gallons sold

614,071

 

 

 

 

 

 

 

 

 

Summary by Category (Amounts in thousands)

Six months ended 10/31/2020

Fuel

 

Grocery & Other
Merchandise

 

Prepared Food
& Fountain

 

Other

 

Total

Revenue

$

2,279,472

 

 

$

1,450,087

 

 

$

559,588

 

 

$

31,779

 

 

$

4,320,926

 

Gross profit

$

414,184

 

 

$

474,591

 

 

$

335,309

 

 

$

31,179

 

 

$

1,255,263

 

 

18.2

%

 

32.7

%

 

59.9

%

 

98.1

%

 

29.1

%

Fuel gallons sold

1,127,089

 

 

 

 

 

 

 

 

 

Six months ended 10/31/2019

 

 

 

 

 

 

 

 

 

Revenue

$

3,142,042

 

 

$

1,348,480

 

 

$

593,723

 

 

$

29,970

 

 

$

5,114,215

 

Gross profit

$

291,787

 

 

$

435,587

 

 

$

365,464

 

 

$

29,913

 

 

$

1,122,751

 

 

9.3

%

 

32.3

%

 

61.6

%

 

99.8

%

 

22.0

%

Fuel gallons sold

1,233,155

 

 

 

 

 

 

 

 

 

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

F2021

(14.6)

%

 

(8.6)

%

 

 

 

 

 

 

F2021

38.2

¢

 

35.3

¢

 

 

 

 

 

 

F2020

(2.0)

 

 

(1.8)

 

 

(2.0)

 

 

(14.7)

 

 

(5.1)

%

F2020

24.4

 

 

22.9

 

 

21.7

 

 

40.8

 

 

26.8

¢

F2019

0.5

 

 

(1.1)

 

 

(3.4)

 

 

(2.8)

 

 

(1.7)

 

F2019

20.5

 

 

20.0

 

 

22.1

 

 

18.6

 

 

20.3

 

Grocery & Other Merchandise

 

Grocery & Other Merchandise

Same-store Sales

Margin

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

F2021

3.6

%

 

6.6

%

 

 

 

 

 

 

F2021

32.2

%

 

33.3

%

 

 

 

 

 

 

F2020

3.2

 

 

3.2

 

 

3.5

 

 

(2.0)

 

 

1.9

%

F2020

31.3

 

 

33.3

 

 

32.9

 

 

30.4

 

 

32.0

%

F2019

3.2

 

 

2.7

 

 

3.4

 

 

5.7

 

 

3.6

 

F2019

32.4

 

 

32.4

 

 

31.9

 

 

31.5

 

 

32.1

 

Prepared Food & Fountain

 

Prepared Food & Fountain

Same-store Sales

Margin

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

F2021

(9.8)

%

 

(3.6)

%

 

 

 

 

 

 

F2021

59.7

%

 

60.1

%

 

 

 

 

 

 

F2020

1.6

 

 

1.9

 

 

2.8

 

 

(13.5)

 

 

(1.5)

%

F2020

62.2

 

 

60.9

 

 

60.2

 

 

60.0

 

 

60.9

%

F2019

1.7

 

 

2.2

 

 

1.5

 

 

2.0

 

 

1.9

 

F2019

62.0

 

 

62.4

 

 

62.3

 

 

62.2

 

 

62.2

 

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 management for internal purposes including our capital budgeting process, evaluating acquisition targets, and assessing performance.

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 and six months ended October 31, 2020 and 2019:

(In thousands)

Three Months Ended October 31,

Six Months Ended October 31,

 

2020

 

2019

2020

 

2019

Net income

$

111,983

 

$

81,981

$

232,575

 

$

167,796

Interest, net

10,634

 

12,683

24,041

 

26,404

Depreciation and amortization

64,294

 

62,888

130,114

 

122,696

Federal and state income taxes

34,501

 

26,130

72,097

 

52,631

EBITDA

$

221,412

 

$

183,682

$

458,827

 

$

369,527

Loss on disposal of assets and impairment charges

1,819

 

730

2,159

 

1,257

Adjusted EBITDA

$

223,231

 

$

184,412

$

460,986

 

$

370,784

NOTES:

  • Gross Profit is defined as revenue less cost of goods sold (exclusive of depreciation and amortization)
  • Inside is defined as the combination of Grocery and Other Merchandise and Prepared Food and Fountain

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 the acquisition, 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, and the potential effect of COVID-19. There are a number of known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any future results expressed or implied by those forward-looking statements, including but not limited to integration of the acquisition, executing our strategic plan, the impact and duration of COVID-19 and related governmental actions, 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 December 8, 2020. 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. 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 for one year after the call.

Investor Relations Contact:
Brian Johnson (515) 965-6587

Media Relations Contact:
Katie Petru (515) 446-6772

Source: Casey’s General Stores

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