Casey's Announces Second Quarter Results

Casey’s General Stores, Inc. ("Casey's" or the "Company") (Nasdaq symbol CASY) a leading convenience store chain in the United States, today announced financial results for the three and six months ended October 31, 2021.

Second Quarter Key Highlights

  • Inside same-store sales increased 6.0% compared to prior year with a margin of 40.7%. Total inside gross profit increased 12.3% to $463.4 million compared to the same period last year.
  • Fuel gallons increased 2.5% on a same-store basis compared to prior year with a fuel margin of 34.7 cents per gallon. Total fuel gross profit increased 13.6% to $231.9 million compared to the same period last year.
  • Diluted EPS of $2.59 compared to $3.00 for the same period a year ago.
  • Casey's announced the pending acquisition of 40 stores from Pilot Corporation, primarily in the Knoxville, TN market.
  • Casey's recognized as a "Corporate Champion" by the Women's Forum of New York for its 50% gender diversity on its Board of Directors.

“Inside sales and fuel gallons sold were up in the second quarter as guest traffic continues to improve,” said Darren Rebelez, President and CEO. “I am very proud of how the Casey’s team responded during a difficult retail environment this quarter. Inside gross profit was up sharply despite product availability pressures, especially in our Prepared Food and Dispensed Beverage business, and an inflationary supply chain environment. Our fuel team achieved strong margins in a challenging rising cost market while also growing fuel gallons sold. We are making excellent progress integrating the Buchanan Energy and Circle K acquisitions and look forward to doing the same with the pending Pilot acquisition.”

Earnings

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2021

 

2020

 

2021

 

2020

Net income (in thousands)

$

96,831

 

 

$

111,983

 

 

$

215,990

 

 

$

232,575

 

Diluted earnings per share

$

2.59

 

 

$

3.00

 

 

$

5.78

 

 

$

6.24

 

Adjusted EBITDA (in thousands)

$

217,009

 

 

$

223,231

 

 

$

460,198

 

 

$

460,986

 

Adjusted EBITDA (reconciled later in the document) was down slightly compared to the same period a year ago as higher gross profit from inside the store and fuel (due to both strong same store volumes and new units) was offset by higher operating expenses due to higher wage rates and credit card fees as well as operating 161 additional stores (or 7%). Net income and diluted EPS in the second quarter were also impacted by higher depreciation expense due to operating more stores than last year.

Inside

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2021

 

2020

 

2021

 

2020

Inside sales (in thousands)

$

1,138,988

 

 

$

1,007,048

 

 

$

2,282,913

 

 

$

2,009,675

 

Inside same-store sales

6.0

%

 

3.5

%

 

7.0

%

 

1.5

%

Grocery and general merchandise same-store sales

6.8

%

 

6.6

%

 

6.9

%

 

5.0

%

Prepared food and dispensed beverage same-store sales

4.1

%

 

(3.6

)%

 

7.3

%

 

(6.6

)%

Inside gross profit (in thousands)

$

463,438

 

 

$

412,653

 

 

$

926,952

 

 

$

809,900

 

Inside margin

40.7

%

 

41.0

%

 

40.6

%

 

40.3

%

Grocery and general merchandise margin

33.3

%

 

33.3

%

 

33.1

%

 

32.7

%

Prepared food and dispensed beverage margin

60.6

%

 

60.1

%

 

60.8

%

 

59.9

%

Inside same-store sales were driven by strong performance in packaged beverages, grocery items such as salty snacks and meat snacks, as well as continued momentum in pizza slices, driven in part by improved guest traffic. Grocery and General Merchandise same-stores sales were up 14% on a two-year stacked basis, due in part to the effective store resets completed last year. Inside margin was positively impacted by the private label program as well as procurement initiatives. Prepared Food and Dispensed Beverage same-store sales were adversely impacted by supply chain challenges in the quarter, notably in bakery and dispensed beverages. The Company implemented selective price increases to offset inflationary pressures throughout the business.

Fuel

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2021

 

2020

 

2021

 

2020

Fuel gallons sold (in thousands)

668,757

 

 

577,581

 

 

1,336,291

 

 

1,127,089

 

Same-store gallons sold

2.5

%

 

(8.6

)%

 

5.6

%

 

(11.7

)%

Fuel gross profit (in thousands)

$

231,883

 

 

$

204,154

 

 

$

466,358

 

 

$

414,184

 

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

34.7¢

 

35.3¢

 

34.9¢

 

36.7¢

 

Same-store gallons sold were positively impacted by higher guest traffic despite lapping a challenging comparison from the previous second quarter. The Company’s total fuel gross profit was up 13.6% versus the prior second quarter, and margin decreased slightly. The Company sold $6.2 million in renewable fuel credits (RINs) in the second quarter, an increase of $2.4 million from the same quarter in the prior year.

Operating Expenses

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2021

 

2020

 

2021

 

2020

Operating expenses (in thousands)

$

500,644

 

 

$

410,348

 

 

$

979,572

 

 

$

796,436

 

Credit card fees (in thousands)

$

52,072

 

 

$

38,529

 

 

$

101,515

 

 

$

74,020

 

Same-store operating expense excluding credit card fees

8.3

%

 

5.4

%

 

12.7

%

 

(0.1

)%

Operating expenses increased 22% during the second quarter. Approximately 9% of the increase is due to operating 161 more stores than prior year. Additionally, approximately 7% of the increase is due to same-store employee and store operating expenses. Finally, approximately 2% of the change is due to an increase in same-store credit card fees from higher retail fuel prices and higher sales volume.

Expansion

 

Store Count

Stores at 4/30/2021

2,243

New store construction

7

Acquisitions

144

Acquisitions not opened

(6)

Prior acquisitions opened

4

Closed

(12)

Stores at 10/31/2021

2,380

Liquidity
At October 31, the Company had approximately $787 million in available liquidity, consisting of approximately $312 million in cash and cash equivalents on hand and $475 million in undrawn borrowing capacity on existing lines of credit.

Share Repurchase
The Company has $300 million remaining under its existing share repurchase program which expires in April 2022. There were no repurchases made against that authorization in the second quarter.

Dividend
At its December meeting, the Board of Directors voted to pay a quarterly dividend of $0.35 per share. The dividend is payable February 15, 2022 to shareholders of record on February 1, 2022.

Fiscal 2022 Outlook
The Company is updating the previously disclosed 2022 outlook as follows:

Due to the recently announced 40-store acquisition of Pilot convenience stores, the Company now expects to add approximately 225 units during fiscal 2022, up from the previously disclosed 200 units. This pending transaction is expected to be EBITDA accretive in fiscal 2022. Total operating expenses are expected to increase in the high-teen percentages, versus the previously disclosed mid-teens percentages, due to the additional units as well as elevated credit card fees brought on by higher retail fuel prices. The impact to the second half of the fiscal year will be an approximate 18-20% increase in the third quarter and an 11-13% increase in the fourth quarter. Interest expense is expected to be approximately $55 million versus the previously disclosed $50 million, depreciation and amortization is expected to be approximately $310 million compared to the previously disclosed $300 million, and the purchase of property and equipment is expected to be approximately $400 million versus the $500 million previously disclosed as the Company reduced new store construction due to the increase in acquisition activity. As noted at the end of the first quarter, the tax rate is expected to be approximately 24.0% - 26.0% for the year.

The Company is maintaining the same-store fuel and inside sales mid-single digit percentage increase that was previously disclosed.

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,

 

2021

 

2020

 

2021

 

2020

Total revenue

$

3,262,942

 

 

$

2,215,905

 

 

$

6,444,935

 

 

$

4,320,926

 

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

2,545,352

 

 

1,584,145

 

 

5,003,458

 

 

3,065,663

 

Operating expenses

500,644

 

 

410,348

 

 

979,572

 

 

796,436

 

Depreciation and amortization

74,258

 

 

64,294

 

 

150,146

 

 

130,114

 

Interest, net

13,520

 

 

10,634

 

 

27,250

 

 

24,041

 

Income before income taxes

129,168

 

 

146,484

 

 

284,509

 

 

304,672

 

Federal and state income taxes

32,337

 

 

34,501

 

 

68,519

 

 

72,097

 

Net income

$

96,831

 

 

$

111,983

 

 

$

215,990

 

 

$

232,575

 

Net income per common share

 

 

 

 

 

 

 

Basic

$

2.61

 

 

$

3.02

 

 

$

5.81

 

 

$

6.29

 

Diluted

$

2.59

 

 

$

3.00

 

 

$

5.78

 

 

$

6.24

 

Basic weighted average shares

37,162,984

 

 

37,030,921

 

 

37,144,744

 

 

37,002,901

 

Plus effect of stock compensation

205,669

 

 

245,962

 

 

205,669

 

 

245,749

 

Diluted weighted average shares

37,368,653

 

 

37,276,883

 

 

37,350,413

 

 

37,248,650

 

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

 

October 31, 2021

 

April 30, 2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

311,698

 

 

$

336,545

 

Receivables

90,598

 

 

79,698

 

Inventories

350,182

 

 

286,598

 

Prepaid expenses

25,312

 

 

11,214

 

Income taxes receivable

17,231

 

 

9,578

 

Total current assets

795,021

 

 

723,633

 

Other assets, net of amortization

147,849

 

 

82,147

 

Goodwill

454,548

 

 

161,075

 

Property and equipment, net of accumulated depreciation of $2,308,424 at October 31, 2021 and $2,206,405 at April 30, 2021

3,854,692

 

 

3,493,459

 

Total assets

$

5,252,110

 

 

$

4,460,314

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities

 

 

 

Current maturities of long-term debt and finance lease obligations

$

34,134

 

 

$

2,354

 

Accounts payable

509,300

 

 

355,471

 

Accrued expenses

260,062

 

 

254,924

 

Total current liabilities

803,496

 

 

612,749

 

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

1,677,391

 

 

1,361,395

 

Deferred income taxes

496,451

 

 

439,721

 

Deferred compensation

15,140

 

 

15,094

 

Insurance accruals, net of current portion

25,374

 

 

26,239

 

Other long-term liabilities

111,124

 

 

72,437

 

Total liabilities

3,128,976

 

 

2,527,635

 

Total shareholders’ equity

2,123,134

 

 

1,932,679

 

Total liabilities and shareholders’ equity

$

5,252,110

 

 

$

4,460,314

 

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

 

Six months ended October 31,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income

$

215,990

 

 

$

232,575

 

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

 

 

 

Depreciation and amortization

150,146

 

 

130,114

 

Amortization of debt issuance costs

717

 

 

 

Share-based compensation

17,500

 

 

14,492

 

(Gain) loss on disposal of assets and impairment charges

(1,707

)

 

2,159

 

Deferred income taxes

58,073

 

 

15,607

 

Changes in assets and liabilities:

 

 

 

Receivables

(8,087

)

 

(7,609

)

Inventories

(39,531

)

 

(13,835

)

Prepaid expenses

(13,698

)

 

(8,381

)

Accounts payable

87,831

 

 

125,719

 

Accrued expenses

(6,134

)

 

39,177

 

Income taxes

(6,898

)

 

22,924

 

Other, net

1,175

 

 

(985

)

Net cash provided by operating activities

455,377

 

 

551,957

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

(123,518

)

 

(158,815

)

Payments for acquisition of businesses, net of cash acquired

(626,126

)

 

 

Proceeds from sales of assets

21,890

 

 

2,667

 

Net cash used in investing activities

(727,754

)

 

(156,148

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

300,000

 

 

650,000

 

Payments of long-term debt

(9,750

)

 

(570,738

)

Payments of debt issuance costs

(249

)

 

 

Net payments of short-term debt

 

 

(120,000

)

Proceeds from exercise of stock options

133

 

 

1,253

 

Proceeds from capital grant

 

 

1,594

 

Payments of cash dividends

(25,234

)

 

(23,591

)

Tax withholdings on employee share-based awards

(17,370

)

 

(7,917

)

Net cash provided by (used in) financing activities

247,530

 

 

(69,399

)

 

Net (decrease) increase in cash and cash equivalents

(24,847

)

 

326,410

 

Cash and cash equivalents at beginning of the period

336,545

 

 

78,275

 

Cash and cash equivalents at end of the period

$

311,698

 

 

$

404,685

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

Six months ended October 31,

 

2021

 

2020

Cash paid during the period for:

 

 

 

Interest, net of amount capitalized

$

25,076

 

 

$

26,535

 

Income taxes, net

14,937

 

 

31,956

 

Noncash investing and financing activities:

 

 

 

Purchased property and equipment in accounts payable

50,713

 

 

18,471

 

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

47,775

 

 

 

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

40,944

 

 

1,109

 

Summary by Category (Amounts in thousands)

Three months ended October 31, 2021

Fuel

 

Grocery &
General
Merchandise

 

Prepared Food
& Dispensed
Beverage

 

Other

 

Total

Revenue

$

2,048,831

 

 

$

829,484

 

 

$

309,504

 

 

$

75,123

 

 

$

3,262,942

 

Gross profit

$

231,883

 

 

$

275,940

 

 

$

187,498

 

 

$

22,269

 

 

$

717,590

 

 

11.3

%

 

33.3

%

 

60.6

%

 

29.6

%

 

22.0

%

Fuel gallons sold

668,757

 

 

 

 

 

 

 

 

 

Three months ended October 31, 2020

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Summary by Category (Amounts in thousands)

Six months ended October 31, 2021

Fuel

 

Grocery &
General
Merchandise

 

Prepared Food
& Dispensed
Beverage

 

Other

 

Total

Revenue

$

4,015,986

 

 

$

1,664,969

 

 

$

617,944

 

 

$

146,036

 

 

$

6,444,935

 

Gross profit

$

466,358

 

 

$

551,348

 

 

$

375,604

 

 

$

48,167

 

 

$

1,441,477

 

 

11.6

%

 

33.1

%

 

60.8

%

 

33.0

%

 

22.4

%

Fuel gallons sold

1,336,291

 

 

 

 

 

 

 

 

 

Six months ended October 31, 2020

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

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

F2022

9.0

%

 

2.5

%

 

 

 

 

 

 

F2022

35.1

¢

 

34.7

¢

 

 

 

 

 

 

F2021

(14.6

)

 

(8.6

)

 

(12.1

)%

 

6.4

%

 

(8.1

)%

F2021

38.2

 

 

35.3

 

 

32.9

¢

 

33.0

¢

 

34.9

¢

F2020

(2.0

)

 

(1.8

)

 

(2.0

)

 

(14.7

)

 

(5.1

)

F2020

24.4

 

 

22.9

 

 

21.7

 

 

40.8

 

 

26.8

 

Grocery & General Merchandise

 

Grocery & General Merchandise

Same-store Sales

Margin

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

Year

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

Year

F2022

7.0

%

 

6.8

%

 

 

 

 

 

 

F2022

33.0

%

 

33.3

%

 

 

 

 

 

 

F2021

3.6

 

 

6.6

 

 

5.4

%

 

12.5

%

 

6.6

%

F2021

32.2

 

 

33.3

 

 

30.7

%

 

31.8

%

 

32.0

%

F2020

3.2

 

 

3.2

 

 

3.5

 

 

(2.0

)

 

1.9

 

F2020

31.3

 

 

33.3

 

 

32.9

 

 

30.4

 

 

32.0

 

Prepared Food & Dispensed Beverage

 

Prepared Food & Dispensed Beverage

Same-store Sales

Margin

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

Year

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

Year

F2022

10.8

%

 

4.1

%

 

 

 

 

 

 

F2022

61.0

%

 

60.6

%

 

 

 

 

 

 

F2021

(9.8

)

 

(3.6

)

 

(5.0

)%

 

13.4

%

 

(2.1

)%

F2021

59.7

 

 

60.1

 

 

60.6

%

 

60.1

%

 

60.1

%

F2020

1.6

 

 

1.9

 

 

2.8

 

 

(13.5

)

 

(1.5

)

F2020

62.2

 

 

60.9

 

 

60.2

 

 

60.0

 

 

60.9

 

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 and six months ended October 31, 2021 and 2020:

(in thousands)

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2021

 

2020

 

2021

 

 

2020

Net income

$

96,831

 

 

$

111,983

 

 

$

215,990

 

 

$

232,575

 

Interest, net

13,520

 

 

10,634

 

 

27,250

 

 

24,041

 

Federal and state income taxes

32,337

 

 

34,501

 

 

68,519

 

 

72,097

 

Depreciation and amortization

74,258

 

 

64,294

 

 

150,146

 

 

130,114

 

EBITDA

216,946

 

 

221,412

 

 

461,905

 

 

458,827

 

Loss (gain) on disposal of assets and impairment charges

63

 

 

1,819

 

 

(1,707

)

 

2,159

 

Adjusted EBITDA

$

217,009

 

 

$

223,231

 

 

$

460,198

 

 

$

460,986

 

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 General Merchandise and Prepared Food and Dispensed Beverage

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, 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 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, 2021. 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.