Casey's Announces Third Quarter Results

ANKENY, Iowa--()--Casey’s General Stores, Inc. ("Casey's" or the "Company") (Nasdaq: CASY) a leading convenience store chain in the United States, today announced financial results for the three and nine months ended January 31, 2023.

Third Quarter Key Highlights

  • Diluted EPS of $2.67, up 56% from the same period a year ago. Diluted EPS benefited by $0.31 due to one-time operating expense reduction of approximately $15 million from the resolution of a legal matter.
  • Inside same-store sales increased 5.6% compared to prior year, and 13.6% on a two-year stack basis, with an inside margin of 40.6%. Total inside gross profit increased 11.6% to $450.6 million compared to the prior year.
  • Same-store fuel gallons were down 0.5% compared to prior year with a fuel margin of 40.7 cents per gallon. Total fuel gross profit increased 10.4% to $262.6 million compared to the prior year.
  • Same-store operating expense excluding credit card fees were up 4.6%, favorably impacted by a 1% reduction in same-store labor hours.
  • Casey's will host an Investor Day on June 27, 2023 in New York City.

“Thanks to the hard work of our entire team, Casey's delivered another stellar quarter by driving inside gross profit while managing operating expenses efficiently,” said Darren Rebelez, President and CEO. “Inside same-store sales were spurred by grocery and general merchandise, notably non-alcoholic and alcoholic beverages, snacks, and candy. Prepared food and dispensed beverage performed well due to strong pizza slice and donut sales. The fuel team continues to strike the right balance between gallon volume and gross profit margin. Finally, I am very proud of the team's ability to continue to effectively manage operating expenses in a challenging inflationary period.”

Earnings

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Net income (in thousands)

$

100,112

 

 

$

64,024

 

 

$

390,599

 

 

$

280,014

 

Diluted earnings per share

$

2.67

 

 

$

1.71

 

 

$

10.42

 

 

$

7.50

 

Adjusted EBITDA (in thousands)

$

222,913

 

 

$

174,336

 

 

$

792,418

 

 

$

634,534

 

Net income, diluted EPS, and Adjusted EBITDA (reconciled later in the document), were up compared to the same period a year ago as higher profitability both inside the store and in fuel was partially offset by higher operating expenses due to operating 41 additional stores.

Inside

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Inside sales (in thousands)

$

1,109,223

 

 

$

1,025,398

 

 

$

3,644,277

 

 

$

3,308,311

 

Inside same-store sales

 

5.6

%

 

 

7.6

%

 

 

6.6

%

 

 

7.1

%

Grocery and general merchandise same-store sales

 

5.8

%

 

 

7.7

%

 

 

6.0

%

 

 

7.1

%

Prepared food and dispensed beverage same-store sales

 

5.0

%

 

 

7.4

%

 

 

7.9

%

 

 

7.3

%

Inside gross profit (in thousands)

$

450,572

 

 

$

403,837

 

 

$

1,459,307

 

 

$

1,330,789

 

Inside margin

 

40.6

%

 

 

39.4

%

 

 

40.0

%

 

 

40.2

%

Grocery and general merchandise margin

 

34.0

%

 

 

32.0

%

 

 

33.7

%

 

 

32.8

%

Prepared food and dispensed beverage margin

 

57.3

%

 

 

58.0

%

 

 

56.5

%

 

 

59.9

%

Total inside sales were up 8.2% for the quarter driven by strong performance in the grocery and general merchandise category, including non-alcoholic and alcoholic beverages, snacks and candy as well as pizza slices and donuts in the prepared food and dispensed beverage category. Inside margin was up 120 basis points compared to the same quarter a year ago. Grocery and general merchandise margin increased by approximately 200 basis points primarily due to a favorable mix shift to higher margin items like energy drinks and candy, as well as private label products, while higher prepared food and dispensed beverage ingredient costs, notably cheese, continued to pressure gross profit margin relative to the prior year. Prepared food and dispensed beverage margin did improve sequentially from the second quarter by approximately 60 basis points, and margin has improved sequentially each quarter throughout the fiscal year.

Fuel1

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Fuel gallons sold (in thousands)

 

644,940

 

 

 

621,770

 

 

 

2,036,450

 

 

 

1,958,061

 

Same-store gallons sold

 

(0.5

)%

 

 

5.7

%

 

 

(0.9

)%

 

 

5.5

%

Fuel gross profit (in thousands)

$

262,573

 

 

$

237,873

 

 

$

855,167

 

 

$

704,231

 

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

 

40.7

¢

 

 

38.3

¢

 

 

42.0

¢

 

 

36.0

¢

Total gallons increased 3.7% compared to the prior year due to the store count increase while same-store gallons sold were down 0.5% versus the prior year. The Company’s total fuel gross profit was up 10.4% versus the prior year, favorably impacted by higher fuel margin. The Company sold $2.9 million in renewable fuel credits (RINs) in the third quarter, a decrease of $7.3 million from the same quarter in the prior year.

Operating Expenses

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Operating expenses (in thousands)

$

515,735

 

 

$

490,997

 

 

$

1,598,213

 

 

$

1,470,569

 

Credit card fees (in thousands)

$

54,032

 

 

$

47,860

 

 

$

181,727

 

 

$

149,375

 

Same-store operating expense excluding credit card fees

 

4.6

%

 

 

2.9

%

 

 

2.8

%

 

 

9.3

%

Operating expenses increased approximately 5% during the third quarter. The approximate $15 million one-time benefit from a legal matter resolution reduced operating expenses by approximately 3%. Excluding that one-time event, operating expenses increased by approximately 8%. Over 2% of the increase is due to operating 41 more stores than prior year. Non-employee same-store operating expense contributed to 2% of the increase. Same-store employee expense made up approximately 1% of the increase, benefited by a 1% reduction in same-store hours.

______________________________
1
Fuel category does not include wholesale fuel activity, which is included in Other.

Expansion

 

Store Count

Stores at 4/30/2022

2,452

 

New store construction

16

 

Acquisitions

12

 

Acquisitions not opened

(4

)

Prior acquisitions opened

2

 

Closed

(6

)

Stores at 1/31/2023

2,472

 

Liquidity

At January 31, 2023, the Company had approximately $876 million in available liquidity, consisting of approximately $413 million in cash and cash equivalents on hand and $463 million in available borrowing capacity on existing lines of credit.

Share Repurchase

The Company has $400 million remaining under its existing share repurchase authorization. There were no repurchases made against that authorization in the third quarter.

Dividend

At its February meeting, the Board of Directors voted to pay a quarterly dividend of $0.38 per share. The dividend is payable May 15, 2023 to shareholders of record on May 1, 2023.

Fiscal 2023 Outlook

The Company is modifying its fiscal 2023 outlook. The Company now expects same-store inside sales growth to be approximately 6% to 7%. The Company now expects same-store fuel gallons to be down 1% to up 1%.

The Company is not updating its outlook for the following metrics. Inside margin is expected to be approximately 40%. Total operating expense increase, excluding the one-time benefit received this quarter, is expected to be near the low end of the annual range of approximately 9% to 10%. The Company expects to add approximately 80 stores in fiscal 2023, and expects to exceed our stated three year commitment of 345 units. Interest expense is expected to be approximately $55 million. Depreciation and amortization is expected to be approximately $320 million and the purchase of property plant and equipment is expected to be approximately $450 to $500 million, including approximately $135 million in one-time store remodel costs for recently acquired stores. The tax rate is expected to be between approximately 24% and 25% 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 January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Total revenue

$

3,332,555

 

 

$

3,048,717

 

 

$

11,765,774

 

 

$

9,493,652

 

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

 

2,595,093

 

 

 

2,384,222

 

 

 

9,381,120

 

 

 

7,387,680

 

Operating expenses

 

515,735

 

 

 

490,997

 

 

 

1,598,213

 

 

 

1,470,569

 

Depreciation and amortization

 

78,088

 

 

 

75,529

 

 

 

232,500

 

 

 

225,675

 

Interest, net

 

11,697

 

 

 

14,431

 

 

 

39,015

 

 

 

41,681

 

Income before income taxes

 

131,942

 

 

 

83,538

 

 

 

514,926

 

 

 

368,047

 

Federal and state income taxes

 

31,830

 

 

 

19,514

 

 

 

124,327

 

 

 

88,033

 

Net income

$

100,112

 

 

$

64,024

 

 

$

390,599

 

 

$

280,014

 

Net income per common share

 

 

 

 

 

 

 

Basic

$

2.69

 

 

$

1.72

 

 

$

10.48

 

 

$

7.54

 

Diluted

$

2.67

 

 

$

1.71

 

 

$

10.42

 

 

$

7.50

 

Basic weighted average shares

 

37,281,103

 

 

 

37,169,213

 

 

 

37,261,049

 

 

 

37,154,883

 

Plus effect of stock compensation

 

283,448

 

 

 

197,370

 

 

 

240,459

 

 

 

197,370

 

Diluted weighted average shares

 

37,564,551

 

 

 

37,366,583

 

 

 

37,501,508

 

 

 

37,352,253

 

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

January 31, 2023

 

April 30, 2022

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

413,199

 

$

158,878

Receivables

 

127,328

 

 

 

108,028

 

Inventories

 

387,136

 

 

 

396,199

 

Prepaid expenses

 

24,430

 

 

 

17,859

 

Income taxes receivable

 

6,111

 

 

 

44,071

 

Total current assets

 

958,204

 

 

 

725,035

 

Other assets, net of amortization

 

188,803

 

 

 

187,219

 

Goodwill

 

614,212

 

 

 

612,934

 

Property and equipment, net of accumulated depreciation of $2,597,268 at January 31, 2023 and $2,425,709 at April 30, 2022

 

4,079,398

 

 

 

3,980,542

 

Total assets

$

5,840,617

 

 

$

5,505,730

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities

 

 

 

Current maturities of long-term debt and finance lease obligations

$

37,727

 

 

$

24,466

 

Accounts payable

 

518,250

 

 

 

588,783

 

Accrued expenses

 

313,832

 

 

 

291,429

 

Total current liabilities

 

869,809

 

 

 

904,678

 

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

 

1,634,500

 

 

 

1,663,403

 

Deferred income taxes

 

544,988

 

 

 

520,472

 

Deferred compensation

 

11,843

 

 

 

12,746

 

Insurance accruals, net of current portion

 

31,298

 

 

 

27,957

 

Other long-term liabilities

 

141,397

 

 

 

135,636

 

Total liabilities

 

3,233,835

 

 

 

3,264,892

 

Total shareholders’ equity

 

2,606,782

 

 

 

2,240,838

 

Total liabilities and shareholders’ equity

$

5,840,617

 

 

$

5,505,730

 

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

 

 

Nine months ended January 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

390,599

 

 

$

280,014

 

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

 

 

 

Depreciation and amortization

 

232,500

 

 

 

225,675

 

Amortization of debt issuance costs

 

1,036

 

 

 

1,112

 

Share-based compensation

 

34,741

 

 

 

29,382

 

Loss (gain) on disposal of assets and impairment charges

 

5,977

 

 

 

(869

)

Deferred income taxes

 

24,516

 

 

 

56,967

 

Changes in assets and liabilities:

 

 

 

Receivables

 

(19,300

)

 

 

(10,006

)

Inventories

 

9,896

 

 

 

(33,579

)

Prepaid expenses

 

(6,571

)

 

 

(9,444

)

Accounts payable

 

(100,714

)

 

 

(12,910

)

Accrued expenses

 

20,869

 

 

 

25,543

 

Income taxes

 

39,548

 

 

 

263

 

Other, net

 

3,496

 

 

 

(15,607

)

Net cash provided by operating activities

 

636,593

 

 

 

536,541

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(301,298

)

 

 

(228,208

)

Payments for acquisition of businesses, net of cash acquired

 

(13,202

)

 

 

(863,371

)

Proceeds from sales of assets

 

13,551

 

 

 

26,504

 

Net cash used in investing activities

 

(300,949

)

 

 

(1,065,075

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

 

 

 

 

450,000

 

Payments of long-term debt

 

(23,563

)

 

 

(14,226

)

Payments of debt issuance costs

 

 

 

 

(1,149

)

Proceeds from exercise of stock options

 

 

 

 

133

 

Payments of cash dividends

 

(41,456

)

 

 

(38,223

)

Tax withholdings on employee share-based awards

 

(16,304

)

 

 

(17,625

)

Net cash (used in) provided by financing activities

 

(81,323

)

 

 

378,910

 

Net increase (decrease) in cash and cash equivalents

 

254,321

 

 

(149,624

)

Cash and cash equivalents at beginning of the period

 

158,878

 

 

 

336,545

 

Cash and cash equivalents at end of the period

$

413,199

 

 

$

186,921

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

 

Nine months ended January 31,

 

2023

 

2022

Cash paid during the period for:

 

 

 

Interest, net of amount capitalized

$

37,765

 

 

$

34,800

 

Income taxes, net

 

56,289

 

 

 

27,387

 

Noncash investing and financing activities:

 

 

 

Purchased property and equipment in accounts payable

 

76,840

 

 

 

38,751

 

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

 

6,909

 

 

 

49,259

 

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

 

13,485

 

 

 

79,867

 

Summary by Category (Amounts in thousands)

Three months ended January 31, 2023

Fuel

 

Grocery &
General
Merchandise

 

Prepared Food
& Dispensed
Beverage

 

Other

 

Total

Revenue

$

2,157,233

 

 

$

795,699

 

 

$

313,524

 

 

$

66,099

 

 

$

3,332,555

 

Gross profit

$

262,573

 

 

$

270,925

 

 

$

179,647

 

 

$

24,317

 

 

$

737,462

 

 

 

12.2

%

 

 

34.0

%

 

 

57.3

%

 

 

36.8

%

 

 

22.1

%

Fuel gallons sold

 

644,940

 

 

 

 

 

 

 

 

 

Three months ended January 31, 2022

 

 

 

 

 

 

 

 

 

Revenue

$

1,951,422

 

 

$

732,514

 

 

$

292,884

 

 

$

71,897

 

 

$

3,048,717

 

Gross profit

$

237,873

 

 

$

234,064

 

 

$

169,773

 

 

$

22,785

 

 

$

664,495

 

 

 

12.2

%

 

 

32.0

%

 

 

58.0

%

 

 

31.7

%

 

 

21.8

%

Fuel gallons sold

 

621,770

 

 

 

 

 

 

 

 

 

Summary by Category (Amounts in thousands)

Nine Months Ended January 31, 2023

Fuel

 

Grocery &
General
Merchandise

 

Prepared Food
& Dispensed
Beverage

 

Other

 

Total

Revenue

$

7,889,495

 

 

$

2,635,939

 

 

$

1,008,338

 

 

$

232,002

 

 

$

11,765,774

 

Gross profit

$

855,167

 

 

$

889,482

 

 

$

569,825

 

 

$

70,180

 

 

$

2,384,654

 

 

 

10.8

%

 

 

33.7

%

 

 

56.5

%

 

 

30.2

%

 

 

20.3

%

Fuel gallons sold

 

2,036,450

 

 

 

 

 

 

 

 

 

Nine Months Ended January 31, 2022

 

 

 

 

 

 

 

 

 

Revenue

$

5,967,408

 

 

$

2,397,483

 

 

$

910,828

 

 

$

217,933

 

 

$

9,493,652

 

Gross profit

$

704,231

 

 

$

785,412

 

 

$

545,377

 

 

$

70,952

 

 

$

2,105,972

 

 

 

11.8

%

 

 

32.8

%

 

 

59.9

%

 

 

32.6

%

 

 

22.2

%

Fuel gallons sold

 

1,958,061

 

 

 

 

 

 

 

 

 

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

F2023

(2.3

)%

 

0.3

%

 

(0.5

)%

 

 

 

 

F2023

44.7

¢

 

40.5

¢

 

40.7

¢

 

 

F2022

9.0

 

 

2.5

 

 

5.7

 

 

1.5

%

 

4.4

%

F2022

35.1

 

34.7

 

38.3

 

36.2

¢

 

36.0

¢

F2021

(14.6

)

 

(8.6

)

 

(12.1

)

 

6.4

 

 

(8.1

)

F2021

38.2

 

 

35.3

 

 

32.9

 

 

33.0

 

 

34.9

 

Grocery & General Merchandise

 

Grocery & General Merchandise

Same-store Sales

Margin

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal
Year

F2023

5.5

%

 

6.9

%

 

5.8

%

 

 

 

 

F2023

33.9

%

 

33.3

%

 

34.0

%

 

 

 

 

F2022

7.0

 

 

6.8

 

 

7.7

 

 

4.3

%

 

6.3

%

F2022

33.0

 

 

33.3

 

 

32.0

 

 

32.5

%

 

32.7

%

F2021

3.6

 

 

6.6

 

 

5.4

 

 

12.5

 

 

6.6

 

F2021

32.2

 

 

33.3

 

 

30.7

 

 

31.8

 

 

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

F2023

8.4

%

 

10.5

%

 

5.0

%

 

 

 

 

F2023

55.6

%

 

56.7

%

 

57.3

%

 

 

 

 

F2022

10.8

 

 

4.1

 

 

7.4

 

 

7.6

%

 

7.4

%

F2022

61.0

 

 

60.6

 

 

58.0

 

 

56.9

%

 

59.2

%

F2021

(9.8

)

 

(3.6

)

 

(5.0

)

 

13.4

 

 

(2.1

)

F2021

59.7

 

 

60.1

 

 

60.6

 

 

60.1

 

 

60.1

 

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 nine months ended January 31, 2023 and 2022:

(in thousands)

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Net income

$

100,112

 

 

$

64,024

 

 

$

390,599

 

 

$

280,014

 

Interest, net

 

11,697

 

 

 

14,431

 

 

 

39,015

 

 

 

41,681

 

Federal and state income taxes

 

31,830

 

 

 

19,514

 

 

 

124,327

 

 

 

88,033

 

Depreciation and amortization

 

78,088

 

 

 

75,529

 

 

 

232,500

 

 

 

225,675

 

EBITDA

 

221,727

 

 

 

173,498

 

 

 

786,441

 

 

 

635,403

 

Loss (gain) on disposal of assets and impairment charges

 

1,186

 

 

 

838

 

 

 

5,977

 

 

 

(869

)

Adjusted EBITDA

$

222,913

 

 

$

174,336

 

 

$

792,418

 

 

$

634,534

 

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. 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 COVID-19 and related governmental actions, 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 March 8, 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. 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.

Contacts

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

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

Contacts

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

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