Casey's Strong Prepared Food Performance Offsets Cigarette Challenges

Casey's Strong Prepared Food Performance Offsets Cigarette Challenges

ANKENY, Iowa--(BUSINESS WIRE)-- Casey's General Stores, Inc. (NAS: CASY) today reported $0.85 in diluted earnings per share for the second quarter of fiscal 2013 ended October 31, 2012 compared to $0.98 for the same period a year ago. Year to date, diluted earnings per share were $1.86 versus $2.01 for the same period last year. Both the quarter and year-to-date earnings were impacted by lower gas margins when compared to the all-time high gas margins from the same periods a year ago. "Our prepared food program is doing exceptionally well, but the cigarette environment remains very challenging for retailers," said Chairman and CEO Robert J. Myers. "We are diligently evaluating the competitive landscape and will maintain a disciplined approach when making cigarette price adjustments."

Gasoline—The Company's annual goal is to increase same-store gallons sold 1% with an average margin of 14.0 cents per gallon. For the second quarter, same-store gallons sold were down 0.4% with an average margin of 14.9 cents per gallon. "We believe higher retail prices had an adverse impact to sales, however the gas margin environment has been favorable when compared to our annual goal." said Myers. Total gallons sold for the year were up 3.2% with an average margin of 14.9 cents per gallon. Year-to-date same store gallons sold were down 0.3%.


Grocery and Other Merchandise—Casey's annual goal is to increase same-store sales 6.2% with an average margin of 32.7%. For the second quarter, same-store sales were down 0.7% with an average margin of 33.4%. "Cigarettes have been adversely impacted by competitive pricing as well as an Illinois state excise tax increase," stated Myers. "However, the grocery & other merchandise margin is above goal primarily due to a more favorable product mix within the category." For the six months ended October 31, 2012, same-store sales were up 0.7% with an average margin of 33.4%. Total sales for the year were up 3.6% and gross profit increased 6.4% to $250 million.

Prepared Food and Fountain—The goal for fiscal 2013 is to increase same-store sales 11% with an average margin of 61.1%. For the quarter, same-store sales were up 10.1% with an average margin of 62.5%. "This category continues to benefit from three primary operating initiatives: expanded hours, pizza delivery, and major store remodels," said Myers. "The margin continues to exceed our annual goal primarily due to an increase in pizza sales." Year to date, total sales were up 14.5% and gross profit rose 19.4% to $182.1 million.

Operating Expenses—Year to date, operating expenses increased 10.5% to $379.4 million. For the second quarter, operating expenses were up 10.6%. Expenses were impacted by the operating initiatives mentioned above, operating 27 more stores than a year ago, and the completion of 20 replacement stores in the last 12 months. "So far this fiscal year we have converted 150 stores to 24-hour operation, added pizza delivery to 103 stores, and completed 51 major remodels," stated Myers. "We will continue to implement these initiatives where we believe we can drive cash flow." Store-level operating expenses for locations not impacted by the initiatives were up approximately 3.5% for the quarter.

Expansion—The annual goal is to increase the total number of stores 4-6%. At the mid-year point, the Company opened 8 new store constructions and completed the acquisition of 3 stores. The Company has also replaced 13 stores. "In November we completed the acquisition of 22 Kum and Go locations and opened our first stores in Tennessee and North Dakota," stated Myers. "We are on pace to build 30 new stores this fiscal year and continue to be optimistic with the acquisition environment." Casey's currently has 13 stores under construction and has 8 stores under written agreement to acquire.

Dividend—At its December meeting, the Board of Directors declared a quarterly dividend of $0.165 per share. The dividend is payable February 15, 2013 to shareholders of record on February 1, 2013.

Casey's General Stores, Inc.

Condensed Consolidated Statements

of Comprehensive Income

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Three months ended October 31,

Six months ended October 31,

2012

2011

2012

2011

Total revenue

$

1,911,644

1,782,518

$

3,779,946

3,656,350

Cost of goods sold (exclusive of

depreciation and amortization,

shown separately below)

1,632,331

1,519,600

3,213,659

3,126,650

Gross profit

279,313

262,918

566,287

529,700

Operating expenses

190,040

171,832

379,439

343,248

Depreciation and amortization

27,148

23,432

53,684

46,327

Interest, net

8,637

8,777

17,541

17,711

Income before income taxes

53,488

58,877

115,623

122,414

Federal and state income taxes

20,629

21,245

43,733

45,391

Net Income

32,859

37,632

71,890

77,023

Other comprehensive income

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-----

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Comprehensive income

$

32,859

37,632

$

71,890

77,023

Net income per common share

Basic

$

.86

.99

$

1.88

2.02

Diluted

$

.85

.98

$

1.86

2.01

Basic weighted average shares

outstanding

38,304,840

38,055,909

38,264,724

38,040,142

Plus effect of stock compensation

353,690

342,934

354,434

328,239

Diluted weighted average shares

outstanding

38,658,530

38,398,843

38,619,158

38,368,381

Casey's General Stores, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

October 31,

April 30,

2012

2012

Assets

Current assets

Cash and cash equivalents

$

39,327

$

55,919

Receivables

21,284

21,700

Inventories

178,298

170,794

Prepaid expenses

2,032

1,298

Deferred income taxes

10,604

13,143

Income tax receivable

8,286

16,424

Total current assets

259,831

279,278

Other assets, net of amortization

13,385

12,403

Goodwill

104,686

104,385

Property and equipment, net of

accumulated depreciation of $901,517 at

October 31, 2012, and of $860,998 at April 30, 2012

1,483,659

1,378,749

Total assets

$

1,861,561

$

1,774,815

Liabilities and Shareholders' Equity

Current liabilities

Current maturities of long-term debt

$

13,244

$

10,737

Accounts payable

215,213

211,165

Accrued expenses

86,272

84,739

Total current liabilities

314,729

306,641

Long-term debt, net of current maturities

660,055

667,930

Deferred income taxes

278,092

260,405

Deferred compensation

15,044

14,698

Other long-term liabilities

21,128

19,100

Total liabilities

1,289,048

1,268,774

Total shareholders' equity

572,513

506,041

Total liabilities and shareholders' equity

$

1,861,561

$

1,774,815

Certain statements in this news release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from future results expressed or implied by those statements. Casey's disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

Sales and Gross Profit by Product

(Amounts in thousands)

Six months ended

Grocery & Other

Prepared Food

10/31/12

Gasoline

Merchandise

& Fountain

Other

Total

Sales

$

2,724,146

$

748,791

$

289,248

$

17,761

$

3,779,946

Gross profit

$

116,429

$

250,040

$

182,080

$

17,738

$

566,287

Margin

4.3%

33.4%

62.9%

99.9%

15.0%

Gasoline gallons

780,268

Six months ended

10/31/11

Sales

$

2,666,412

$

722,987

$

252,681

$

14,270

$

3,656,350

Gross profit

$

128,009

$

234,950

$

152,501

$

14,240

$

529,700

Margin

4.8%

32.5%

60.4%

99.8%

14.5%

Gasoline gallons

755,911

Gasoline Gallons

Gasoline Margin

Same-store Sales Growth

(Cents per gallon, excluding credit card fees)

Fiscal

Fiscal

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

F2013

-0.2

%

-0.4

%

F2013

14.9

¢

14.9

¢

F2012

-2.7

-2.9

-2.4

%

2.5

%

-1.5

%

F2012

17.2

16.7

13.6

¢

13.7

¢

15.3

¢

F2011

1.5

3.6

3.5

-1.9

1.6

F2011

16.4

14.9

13.9

15.6

15.2

Grocery & Other Merchandise

Grocery & Other Merchandise

Same-store Sales Growth

Margin

Fiscal

Fiscal

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

F2013

2.6

%

-0.7

%

F2013

33.4

%

33.4

%

F2012

6.2

5.8

6.3

%

8.5

%

6.7

%