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Casey's Announces Second Quarter Results; Updates Fiscal 2023 Outlook

2022-12-06 17:05 ET - News Release


ANKENY, Iowa -- (Business Wire)

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 six months ended October 31, 2022.

Second Quarter Key Highlights

  • Diluted EPS of $3.67, up 42% from the same period a year ago.
  • Inside same-store sales increased 7.9% compared to prior year, and 14.4% on a two-year stack basis, with an inside margin of 39.8%. Total inside gross profit increased 8.9% to $504.5 million compared to the prior year.
  • Same-store fuel gallons were up 0.3% compared to prior year with a fuel margin of 40.5 cents per gallon. Total fuel gross profit increased 22.7% to $284.4 million compared to the prior year.
  • Same-store operating expense excluding credit card fees were up 1.3%, favorably impacted by a 3% reduction in same-store labor hours.
  • The Company is updating its Fiscal 2023 Outlook due to improved inside sales and operating expense performance.

“Thanks to our entire team, Casey's delivered another excellent quarter by growing inside sales while driving efficiency throughout the business,” said Darren Rebelez, President and CEO. “Inside same-store sales were driven by prepared food and dispensed beverages, most notably pizza and fountain sales. Grocery and general merchandise achieved impressive results in both alcoholic and non-alcoholic beverages. The fuel gross profit dollars remained strong as our fuel team executed at a high level again and struck the right balance between sales volume and gross profit margin. The resiliency of our business model along with the ability to effectively execute on our long-term strategic plan continues to drive shareholder value.”

Earnings

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

2022

 

2021

 

2022

 

2021

Net income (in thousands)

$

137,555

 

$

96,831

 

$

290,487

 

$

215,990

Diluted earnings per share

$

3.67

 

$

2.59

 

$

7.75

 

$

5.78

Adjusted EBITDA (in thousands)

$

276,296

 

$

217,009

 

$

569,505

 

$

460,198

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 83 additional stores, as well as increased credit card fees resulting from the higher retail price of fuel.

Inside

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Inside sales (in thousands)

$

1,268,436

 

 

$

1,138,988

 

 

$

2,535,053

 

 

$

2,282,913

 

Inside same-store sales

 

7.9

%

 

 

6.0

%

 

 

7.0

%

 

 

7.0

%

Grocery and general merchandise same-store sales

 

6.9

%

 

 

6.8

%

 

 

6.1

%

 

 

6.9

%

Prepared food and dispensed beverage same-store sales

 

10.5

%

 

 

4.1

%

 

 

9.4

%

 

 

7.3

%

Inside gross profit (in thousands)

$

504,474

 

 

$

463,438

 

 

$

1,008,734

 

 

$

926,952

 

Inside margin

 

39.8

%

 

 

40.7

%

 

 

39.8

%

 

 

40.6

%

Grocery and general merchandise margin

 

33.3

%

 

 

33.3

%

 

 

33.6

%

 

 

33.1

%

Prepared food and dispensed beverage margin

 

56.7

%

 

 

60.6

%

 

 

56.2

%

 

 

60.8

%

Total inside sales were up 11.4% for the quarter driven by strong performance in prepared food items including both pizza slices and whole pies, as well as non-alcoholic and alcoholic beverages, snacks and candy from the grocery and general merchandise category. Inside margin was down 90 basis points compared to the same quarter a year ago. Grocery and general merchandise margin was consistent with the prior year, while higher prepared food and dispensed beverage ingredient costs, notably cheese, partially offset by price adjustments, continued to pressure gross profit margin relative to the prior year.

Fuel1

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Fuel gallons sold (in thousands)

 

702,043

 

 

 

668,757

 

 

 

1,391,510

 

 

 

1,336,291

 

Same-store gallons sold

 

0.3

%

 

 

2.5

%

 

 

(1.2

) %

 

 

5.6

%

Fuel gross profit (in thousands)

$

284,407

 

 

$

231,883

 

 

$

592,595

 

 

$

466,358

 

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

40.5 ¢

 

34.7 ¢

 

42.6 ¢

 

34.9 ¢

Total gallons increased 5.0% compared to the prior year due to the store count increase while same-store gallons sold were up 0.3% versus the prior year. The Company’s total fuel gross profit was up 22.7% versus the prior year, favorably impacted by higher cents per gallon. The Company sold $11.1 million in renewable fuel credits (RINs) in the second quarter, an increase of $4.8 million from the same quarter in the prior year.

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

Operating Expenses

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Operating expenses (in thousands)

$

539,207

 

 

$

500,644

 

 

$

1,082,478

 

 

$

979,572

 

Credit card fees (in thousands)

$

60,469

 

 

$

52,072

 

 

$

127,696

 

 

$

101,515

 

Same-store operating expense excluding credit card fees

 

1.3

%

 

 

8.3

%

 

 

1.9

%

 

 

12.7

%

Operating expenses increased 7.7% during the second quarter. Over 2% of the increase is due to operating 83 more stores than prior year and over 1% of the change is related to an increase in same-store credit card fees from higher retail fuel prices. Approximately 1% of the increase was due to a non-cash impairment charge and approximately 1% of the increase is from internal fuel expense related to grocery self-distribution. Same-store operating expense excluding credit card fees was also up 1.3%, benefited by a 3% reduction in same-store hours.

Expansion

 

Store Count

Stores at 4/30/2022

2,452

New store construction

9

Acquisitions

3

Acquisitions not opened

(2)

Prior acquisitions opened

2

Closed

(1)

Stores at 10/31/2022

2,463

Liquidity

At October 31, 2022, the Company had approximately $884 million in available liquidity, consisting of approximately $415 million in cash and cash equivalents on hand and $469 million in undrawn 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 second quarter.

Dividend

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

Fiscal 2023 Outlook

Due to the strong year-to-date performance the Company is modifying its fiscal 2023 outlook. The Company now expects same-store inside sales to be approximately 5% to 7%. Total operating expense increase is expected to be near the low end of the annual range which was approximately 9% to 10%. The tax rate is now expected to be between approximately 24% and 25% for the year.

The Company is not updating its outlook for the following metrics. Inside margin is expected to be approximately 40%. The Company expects same-store fuel gallons to be flat to 2% higher. 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.

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Total revenue

$

3,978,575

 

$

3,262,942

 

$

8,433,219

 

$

6,444,935

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

 

3,167,633

 

 

2,545,352

 

 

6,786,027

 

 

5,003,458

Operating expenses

 

539,207

 

 

500,644

 

 

1,082,478

 

 

979,572

Depreciation and amortization

 

78,117

 

 

74,258

 

 

154,412

 

 

150,146

Interest, net

 

13,502

 

 

13,520

 

 

27,318

 

 

27,250

Income before income taxes

 

180,116

 

 

129,168

 

 

382,984

 

284,509

Federal and state income taxes

 

42,561

 

 

32,337

 

 

92,497

 

 

68,519

Net income

$

137,555

 

$

96,831

 

$

290,487

 

$

215,990

Net income per common share

 

 

 

 

 

 

 

Basic

$

3.69

 

$

2.61

 

$

7.80

 

$

5.81

Diluted

$

3.67

 

$

2.59

 

$

7.75

 

$

5.78

Basic weighted average shares

 

37,277,080

 

 

37,162,984

 

 

37,250,580

 

 

37,144,744

Plus effect of stock compensation

 

246,679

 

 

205,669

 

 

215,335

 

 

205,669

Diluted weighted average shares

 

37,523,759

 

 

37,368,653

 

 

37,465,915

 

 

37,350,413

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

 

October 31, 2022

 

April 30, 2022

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

414,798

 

$

158,878

Receivables

 

157,491

 

 

108,028

Inventories

 

393,320

 

 

396,199

Prepaid expenses

 

27,734

 

 

17,859

Income taxes receivable

 

 

 

44,071

Total current assets

 

993,343

 

 

725,035

Other assets, net of amortization

 

177,593

 

 

187,219

Goodwill

 

612,934

 

 

612,934

Property and equipment, net of accumulated depreciation of $2,530,393 at October 31, 2022 and $2,425,709 at April 30, 2022

 

4,006,594

 

 

3,980,542

Total assets

$

5,790,464

 

$

5,505,730

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities

 

 

 

Current maturities of long-term debt and finance lease obligations

$

33,996

 

$

24,466

Accounts payable

 

587,030

 

 

588,783

Accrued expenses

 

298,962

 

 

291,429

Income taxes payable

 

1,310

 

 

Total current liabilities

 

921,298

 

 

904,678

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

 

1,639,580

 

 

1,663,403

Deferred income taxes

 

545,756

 

 

520,472

Deferred compensation

 

11,668

 

 

12,746

Insurance accruals, net of current portion

 

29,816

 

 

27,957

Other long-term liabilities

 

129,530

 

 

135,636

Total liabilities

 

3,277,648

 

 

3,264,892

Total shareholders’ equity

 

2,512,816

 

 

2,240,838

Total liabilities and shareholders’ equity

$

5,790,464

 

$

5,505,730

Casey’s General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

 

Six months ended October 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net income

$

290,487

 

 

$

215,990

 

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

 

 

 

Depreciation and amortization

 

154,412

 

 

 

150,146

 

Amortization of debt issuance costs

 

691

 

 

 

717

 

Share-based compensation

 

25,875

 

 

 

17,500

 

Loss (gain) on disposal of assets and impairment charges

 

4,791

 

 

 

(1,707

)

Deferred income taxes

 

25,284

 

 

 

58,073

 

Changes in assets and liabilities:

 

 

 

Receivables

 

(49,463

)

 

 

(8,087

)

Inventories

 

3,023

 

 

 

(39,531

)

Prepaid expenses

 

(9,875

)

 

 

(13,698

)

Accounts payable

 

(14,330

)

 

 

87,831

 

Accrued expenses

 

6,224

 

 

 

(6,134

)

Income taxes

 

46,707

 

 

 

(6,898

)

Other, net

 

2,273

 

 

 

1,175

 

Net cash provided by operating activities

 

486,099

 

 

 

455,377

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(177,327

)

 

 

(123,518

)

Payments for acquisition of businesses, net of cash acquired

 

(2,692

)

 

 

(626,126

)

Proceeds from sales of assets

 

10,052

 

 

 

21,890

 

Net cash used in investing activities

 

(169,967

)

 

 

(727,754

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

 

 

 

 

300,000

 

Payments of long-term debt

 

(17,302

)

 

 

(9,750

)

Payments of debt issuance costs

 

 

 

 

(249

)

Proceeds from exercise of stock options

 

 

 

 

133

 

Payments of cash dividends

 

(27,292

)

 

 

(25,234

)

Tax withholdings on employee share-based awards

 

(15,618

)

 

 

(17,370

)

Net cash (used in) provided by financing activities

 

(60,212

)

 

 

247,530

 

Net increase (decrease) in cash and cash equivalents

 

255,920

 

 

 

(24,847

)

Cash and cash equivalents at beginning of the period

 

158,878

 

 

 

336,545

 

Cash and cash equivalents at end of the period

$

414,798

 

 

$

311,698

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

 

Six months ended October 31,

 

 

2022

 

 

2021

Cash paid during the period for:

 

 

 

Interest, net of amount capitalized

$

25,077

 

$

25,076

Income taxes, net

 

17,696

 

 

14,937

Noncash investing and financing activities:

 

 

 

Purchased property and equipment in accounts payable

 

59,236

 

 

50,713

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

 

2,119

 

 

47,775

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

 

1,163

 

 

40,944

Summary by Category (Amounts in thousands)

Three months ended October 31, 2022

Fuel

 

Grocery &

General

Merchandise

 

Prepared Food

& Dispensed

Beverage

 

Other

 

Total

Revenue

$

2,635,920

 

 

$

917,176

 

 

$

351,260

 

 

$

74,219

 

 

$

3,978,575

 

Gross profit

$

284,407

 

 

$

305,250

 

 

$

199,224

 

 

$

22,061

 

 

$

810,942

 

 

 

10.8

%

 

 

33.3

%

 

 

56.7

%

 

 

29.7

%

 

 

20.4

%

Fuel gallons sold

 

702,043

 

 

 

 

 

 

 

 

 

Three months ended October 31, 2021

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Summary by Category (Amounts in thousands)

Six Months Ended October 31, 2022

Fuel

 

Grocery &

General

Merchandise

 

Prepared Food

& Dispensed

Beverage

 

Other

 

Total

Revenue

$

5,732,262

 

 

$

1,840,240

 

 

$

694,813

 

 

$

165,904

 

 

$

8,433,219

 

Gross profit

$

592,595

 

 

$

618,557

 

 

$

390,177

 

 

$

45,863

 

 

$

1,647,192

 

 

 

10.3

%

 

 

33.6

%

 

 

56.2

%

 

 

27.6

%

 

 

19.5

%

Fuel gallons sold

 

1,391,510

 

 

 

 

 

 

 

 

 

Six Months Ended October 31, 2021

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

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

%

 

 

 

 

 

 

F2023

44.7 ¢

 

40.5 ¢

 

 

 

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

%

 

 

 

 

 

 

F2023

33.9

%

 

33.3

%

 

 

 

 

 

 

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

%

 

 

 

 

 

 

F2023

55.6

%

 

56.7

%

 

 

 

 

 

 

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 six months ended October 31, 2022 and 2021:

(in thousands)

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

$

137,555

 

$

96,831

 

$

290,487

 

$

215,990

 

Interest, net

 

13,502

 

 

13,520

 

 

27,318

 

 

27,250

 

Federal and state income taxes

 

42,561

 

 

32,337

 

 

92,497

 

 

68,519

 

Depreciation and amortization

 

78,117

 

 

74,258

 

 

154,412

 

 

150,146

 

EBITDA

 

271,735

 

 

216,946

 

 

564,714

 

 

461,905

 

Loss (gain) on disposal of assets and impairment charges

 

4,561

 

 

63

 

 

4,791

 

 

(1,707

)

Adjusted EBITDA

$

276,296

 

$

217,009

 

$

569,505

 

$

460,198

 

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 December 7, 2022. 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

Source: Casey’s General Stores

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