Business Wire | Sep 8, 2020 04:15PM EDT

Casey's Posts Record First Quarter Financial Results

Sep. 08, 2020

ANKENY, Iowa--(BUSINESS WIRE)--Sep. 08, 2020--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 months ended July 31, 2020.

First Quarter Key Highlights

* Diluted earnings per share of $3.24 compared to $2.31 for the same period a year ago, an increase of 40.3%. * Fuel gross profit increased 39% driven by a fuel margin of 38.2 cents for the quarter versus 24.4 cents in the prior-year. Same-store gallons sold decreased 14.6% in the first quarter compared to the prior year. * Inside same-store sales were approximately flat for the quarter with an average margin of 39.6%. Digital revenue grew 162% in the quarter. * Casey's Rewards exceeded 2.5 million members, a 25% increase from April 30, 2020. * Liquidity remains strong with approximately $572 million available. $569 million in debt was refinanced to 2030 and 2032.

"Throughout the first quarter, Casey's demonstrated the ability to both safely serve our communities and guests through a constantly changing environment and deliver strong results," said President and CEO Darren Rebelez. "Sales volumes improved this quarter, combined with solid fuel margin execution and disciplined operating expense control, resulting in 40% growth in diluted earnings per share. Casey's continues to execute on our strategic plan, including investment in the guest experience with new digital capabilities to engage our guests today, and down the road."

Earnings

Three Months Ended July 31,

2020 2019

Net income (in thousands) $ 120,592 $ 85,815

Diluted earnings per share $ 3.24 $ 2.31

Adjusted EBITDA (in thousands) $ 237,755 $ 186,372

Net income, diluted EPS, and Adjusted EBITDA (reconciled later in the document) in the first quarter were significantly greater than prior year due to higher fuel gross profit, partially offset by a slight decline in inside gross profit.

Fuel

Three Months Ended July 31,

2020 2019

Fuel gallons sold (in thousands) 549,508 619,084

Same-store gallons sold decrease (14.6 )% (2.0 )%

Fuel gross profit (in thousands) $ 210,030 $ 150,989

Fuel margin (cents per gallon, excluding credit 38.2 ? 24.4 ?card fees)

Same-store gallons sold were adversely impacted by COVID-19 and lower guest traffic, though these eased throughout the quarter. Fuel gross profit benefited from a higher fuel margin driven in part by the Company's centralized retail pricing strategy and procurement improvements.

Inside

Three Months Ended July 31,

2020 2019

Inside sales (in thousands) $ 1,002,627 $ 983,795

Inside same-store sales (decrease) increase (0.4 ) 2.7 % %

Grocery and other merchandise same-store sales 3.6 % 3.2 %increase

Prepared food and fountain same-store sales (9.8 ) 1.6 %(decrease) increase %

Inside gross profit (in thousands) $ 397,247 $ 399,465

Inside margin 39.6 % 40.6 %

Grocery and other merchandise margin 32.2 % 31.3 %

Prepared food and fountain margin 59.7 % 62.2 %

Inside same-store sales steadily improved throughout the quarter. Strong performance in alcohol and whole pizza pies were offset by store traffic declines along with restrictions limiting self-serve prepared food items such as bakery and dispensed beverages. These restrictions also caused a product mix shift that adversely impacted inside margin.

Operating Expenses

Three Months Ended July 31,

2020 2019

Operating expenses (in thousands) $ 386,088 $ 379,841

Credit card fees (in thousands) $ 35,490 $ 40,382

Same-store operating expense excluding credit card (5.6 ) 2.5 %fees (decrease) increase %

Operating expenses were up due to operating 53 more stores than this time last year, as well as $15 million in COVID-related expenses, offset by a reduction in store hours and credit card fees.

Expansion

Store Count

Stores at 4/30/2020 2,207

New store construction 9

Closed (2)

Stores at 7/31/2020 2,214

Liquidity

At July 31st, the Company had approximately $572 million in available liquidity, consisting of approximately $247 million in cash and cash equivalents on hand and $325 million in borrowing capacity on existing lines of credit. On August 10, 2020, the Company completed the refinancing of the $569 million 5.22% notes due August 2020 with the proceeds from $650 million 2.85% and 2.96% senior notes, issued via private placement, maturing August 7, 2030 and August 6, 2032.

Share Repurchase

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

Dividend

At its September meeting, the Board of Director declared a quarterly dividend of $0.32 per share. The dividend is payable November 16, 2020 to shareholders of record on November 2, 2020.

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,

2020 2019

Total revenue $ 2,105,021 $ 2,626,629

Cost of goods sold (exclusive of depreciation and 1,481,518 2,060,943amortization, shown separately below)

Operating expenses 386,088 379,841

Depreciation and amortization 65,820 59,808

Interest, net 13,407 13,721

Income before income taxes 158,188 112,316

Federal and state income taxes 37,596 26,501

Net income $ 120,592 $ 85,815

Net income per common share

Basic $ 3.26 $ 2.33

Diluted $ 3.24 $ 2.31

Basic weighted average shares 36,971,376 36,864,070

Plus effect of stock compensation 270,797 221,852

Diluted weighted average shares 37,242,173 37,085,922

Casey's General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

July 31, April 30, 2020 2020

Assets

Current assets

Cash and cash equivalents $ 246,516 $ 78,275

Receivables 55,647 48,500

Inventories 238,795 236,007

Prepaid expenses 17,133 9,801

Income tax receivable - 14,667

Total current assets 558,091 387,250

Other assets, net of amortization 70,877 71,766

Goodwill 161,075 161,075

Property and equipment, net of accumulateddepreciation of $2,050,737 at July 31, 2020 and 3,308,950 3,323,801$2,037,708 at April 30, 2020

Total assets $ 4,098,993 $ 3,943,892

Liabilities and Shareholders' Equity

Current liabilities

Lines of credit $ - $ 120,000

Current maturities of long-term debt 2,269 570,280

Accounts payable 310,118 184,800

Accrued expenses 210,078 188,348

Income taxes payable 11,451 -

Total current liabilities 533,916 1,063,428

Long-term debt, net of current maturities 1,281,741 714,502

Deferred income taxes 445,365 435,598

Deferred compensation 14,432 13,604

Insurance accruals, net of current portion 20,766 22,862

Other long-term liabilities 51,535 50,693

Total liabilities 2,347,755 2,300,687

Total shareholders' equity 1,751,238 1,643,205

Total liabilities and shareholders' equity $ 4,098,993 $ 3,943,892

Casey's General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

Three months ended July 31,

2020 2019

Cash flows from operating activities:

Net income $ 120,592 $ 85,815

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

Depreciation and amortization 65,820 59,808

Share-based compensation 7,021 7,542

Loss on disposal of assets and impairment charges 340 527

Deferred income taxes 9,767 17,052

Changes in assets and liabilities:

Receivables (7,147 ) (1,698 )

Inventories (2,788 ) (474 )

Prepaid expenses (7,332 ) (5,476 )

Accounts payable 117,756 3,610

Accrued expenses 21,631 (3,699 )

Income taxes 27,087 15,054

Other, net (697 ) 696

Net cash provided by operating activities 352,050 178,757

Cash flows from investing activities:

Purchase of property and equipment (45,146 ) (101,398 )

Payments for acquisition of businesses, net of - (4,868 )cash acquired

Proceeds from sales of property and equipment 1,695 1,699

Net cash used in investing activities (43,451 ) (104,567 )

Cash flows from financing activities:

Repayments of long-term debt (873 ) (905 )

Net payments of short-term debt (120,000 ) (25,000 )

Proceeds from exercise of stock options 211 2,261

Payments of cash dividends (11,779 ) (10,633 )

Tax withholdings on employee share-based awards (7,917 ) (6,476 )

Net cash used in financing activities (140,358 ) (40,753 )

Net increase in cash and cash equivalents 168,241 33,437

Cash and cash equivalents at beginning of the 78,275 63,296 period

Cash and cash equivalents at end of the period $ 246,516 $ 96,733

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Three months ended July 31,

2020 2019

Cash paid (received) during the period for:

Interest, net of amount capitalized $ 6,882 $ 6,837

Income taxes, net 45 (6,401 )



Noncash investing and financing activities:

Purchased property and equipment in accounts 12,890 23,947 payable

Noncash additions from adoption of ASC 842 - 22,635

Summary by Category (Amounts in thousands)

Threemonths Grocery & Preparedended 7 Fuel Other Food Other Total/31/ Merchandise & Fountain2020

Revenue $ 1,085,981 $ 731,861 $ 270,766 $ 16,413 $ 2,105,021

Gross $ 210,030 $ 235,599 $ 161,648 $ 16,226 $ 623,503 profit

19.3 % 32.2 % 59.7 % 98.9 % 29.6 %

Fuelgallons 549,508 sold

Threemonthsended 7 /31/2019

Revenue $ 1,627,568 $ 687,918 $ 295,877 $ 15,266 $ 2,626,629

Gross $ 150,989 $ 215,453 $ 184,012 $ 15,232 $ 565,686 profit

9.3 % 31.3 % 62.2 % 99.8 % 21.5 %

Fuelgallons 619,084 sold

Fuel Gallons Fuel Margin

Same-store Sales (Cents per gallon, excluding credit card fees)

Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal Year Year F2021 (14.6 ) - - - - F2021 38.2 ? - - - - %

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 Q1 Q2 Q3 Q4 Fiscal Year Year

F2021 3.6 % - - - - F2021 32.2 % - - - -

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 Q1 Q2 Q3 Q4 Fiscal Year Year F2021 (9.8 ) - - - - F2021 59.7 % - - - - %

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 months ended July 31, 2020 and 2019:

(In thousands) Three months ended July 31,

2020 2019

Net income $ 120,592 85,815

Interest, net 13,407 13,721

Federal and state income taxes 37,596 26,501

Depreciation and amortization 65,820 59,808

EBITDA $ 237,415 185,845

Loss on disposal of assets and impairment charges 340 527

Adjusted EBITDA $ 237,755 186,372

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 expectations for future periods, possible or assumed future results of operations, financial conditions, liquidity and needs, the Company's supply chain, business strategies, growth opportunities, performance at our stores, and the potential effects 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 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 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 9, 2020. The call will be broadcast live over the Internet at 9:30 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.

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

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