CASY Caseys General Stores Inc

Casey’s General Stores, Inc. (Nasdaq: CASY) today reported diluted earnings per share of $1.28 for the second quarter of fiscal 2018 ended October 31, 2017, compared to $1.44 per share for the same quarter a year ago. "The Company surpassed the 2,000 store milestone and now has 200 new-store sites either under agreement or under construction at the end of the quarter, including its first store in the state of Michigan," said Terry Handley, President and Chief Executive Officer. "In addition, we recently began the consultation phase of our digital engagement and price optimization projects. We continue to make investments to enhance ongoing operations and support our long-term vision to create shareholder value."

Fuel - The Company's fiscal 2018 guidance was to increase same-store gallons sold 1.0% to 2.0% with an average margin of 18.0 to 20.0 cents per gallon. For the quarter, same-store gallons sold were up 1.9% with an average margin of 19.7 cents per gallon. "The Company is an industry leader in same-store gallons sold, and continues to gain market share in this category," said Handley. "Further, our fuel pricing strategy positioned us to take advantage of market volatility throughout the quarter to realize a fuel margin near the top end of our guidance." The Company sold 17.3 million renewable fuel credits for $14.5 million during the second quarter. Total gallons sold for the quarter were up 5.7% to 561.7 million gallons while gross profit dollars increased 11.7% to $110.7 million. Year to date, same-store gallons sold were up 1.8% with an average margin of 19.5 cents per gallon.

Grocery and Other Merchandise - The Company's fiscal 2018 guidance was to increase same-store sales 2.0% to 4.0% with an average margin of 31.0% to 32.0%. For the quarter, same-store sales were up 2.5% with an average margin of 32.0%. "Both the quarter and year-to-date same-store sales and average margin was within our annual performance guidance," stated Handley. "We continue to gain market share in this category." For the first quarter, total grocery and other merchandise revenue increased 5.0% to $572.2 million, and gross profit dollars were up 4.9% to $183.1 million. Year to date, same-store sales were up 2.8% with an average margin of 31.9%. Total revenue for the first six months was up 5.3% to $1.2 billion while total gross profit dollars increased 5.6% to $373.5 million.

Prepared Food and Fountain - The fiscal 2018 guidance was to increase same-store sales 4.0% to 6.0% with an average margin of 61.5% to 62.5%. Same-store sales for the quarter were up 2.1% with an average margin of 61.3%. "Softer traffic in the back half of the quarter affected overall results in the category," said Handley. Total prepared food and fountain revenue increased 5.5% to $262.0 million in the second quarter while gross profit dollars grew 2.7% to $160.5 million. Year to date, total prepared food and fountain revenue was up 6.5% to $523.8 million, and total gross profit dollars were up 4.8% to $324.2 million. For the first six months, same-store sales were up 2.9% with an average margin of 61.9%.

Operating Expenses - Casey's fiscal 2018 guidance was a 9.0% to 11.0% increase in total operating expenses. For the second quarter, total operating expenses increased 9.4% to $322.9 million. Year to date, total operating expenses increased 9.7% to $644.2 million. Both quarter-to-date and year-to-date increases were driven by increases in employee-related costs from operating more stores and implementing growth programs in more stores compared to the same time periods last year. In addition, credit card fees and fuel expenses combined were up $4.1 million for the quarter, primarily due to higher fuel prices. Store level operating expenses for open stores not impacted by recent growth programs were up 3.7% for the quarter. "We're encouraged by the numerous steps we've taken to further control overall cost increases and will continue to look for additional ways to drive efficiencies in this area going forward," added Handley.

Expansion - The Company's fiscal 2018 guidance was to build or acquire 90 to 120 stores, replace 30 existing locations, and complete 75 major remodels. At the end of the second quarter, the Company had built and opened 12 new stores, acquired 14 stores, completed 14 replacements, and remodeled 28 stores. In addition, there were 66 new stores, 18 replacement stores, and 14 major remodel stores under construction. Finally, the Company had 134 sites under agreement for new store construction and 16 acquisition stores under agreement to purchase. "The acquisition pipeline continues to expand, which further complements the accelerated growth in our new store construction activity," said Handley. "The Company is positioned well to take advantage of a consolidating market and drive unit growth at faster levels than we have in the past."

Share Repurchase Program - During the second quarter of fiscal 2018, the Company repurchased 510,193 shares of its common stock under its open market share repurchase program for approximately $55.3 million, or an average price of $108.41 per share. As of October 31, 2017, the Company had a total remaining authorized amount for share repurchases of $117.4 million.

Dividend - At its December meeting, the Board of Directors declared a quarterly dividend of $0.26 per share. The dividend is payable February 15, 2018 to shareholders of record on February 1, 2018.

Fiscal 2018 Guidance - Based on the softer traffic experienced in the second quarter, the Company is revising its prepared food and fountain same-store sales guidance to 2.0% to 4.0% from 4.0% to 6.0%. There were no other changes to the fiscal 2018 guidance. Below is a summary of the previous and current fiscal 2018 guidance:

    Same-store Sales Average Margin Previous   Current Previous   Current Fuel (Gallons and CPG) 1.0 - 2.0% 1.0 - 2.0% 18.0 - 20.0 18.0 - 20.0 Grocery and Other Merchandise 2.0 - 4.0% 2.0 - 4.0% 31.0 - 32.0% 31.0 - 32.0% Prepared Food and Fountain 4.0 - 6.0% 2.0 - 4.0% 61.5 - 62.5% 61.5 - 62.5% Previous Current Operating Expenses 9.0 - 11.0% 9.0 - 11.0% Depreciation and Amortization 13.0 - 15.0% 13.0 - 15.0% Build or Acquire 90 - 120 stores 90 - 120 stores Replacements 30 stores 30 stores Major Remodels 75 stores 75 stores      

Casey’s General Stores, Inc.Condensed ConsolidatedStatements of Income(Dollars in thousands, except share and per share amounts) (Unaudited)

  Three Months EndedOctober 31, Six Months EndedOctober 31, 2017   2016 2017   2016 Total revenue $ 2,153,745 $ 1,920,055 $ 4,247,484 $ 3,890,134 Cost of goods sold (exclusive of depreciation and amortization, shown separately below) 1,686,088 1,476,537 3,303,130 2,996,821 Operating expenses 322,949 295,289 644,196 587,417 Depreciation and amortization 54,157 48,675 106,526 94,530 Interest, net   12,976     10,075     24,351     20,615   Income before income taxes 77,575 89,479 169,281 190,751 Federal and state income taxes   28,657     32,299     63,605     66,179   Net income $ 48,918   $ 57,180   $ 105,676   $ 124,572   Net income per common share Basic $ 1.29   $ 1.46   $ 2.77   $ 3.18   Diluted $ 1.28   $ 1.44   $ 2.75   $ 3.14   Basic weighted average shares 37,804,649 39,189,804 38,108,105 39,177,746 Plus effect of stock compensation   378,950     472,735     379,802     472,713   Diluted weighted average shares   38,183,599     39,662,539     38,487,907     39,650,459        

Casey’s General Stores, Inc.Condensed Consolidated Balance Sheets(Dollars in thousands)(Unaudited)

  October 31, 2017 April 30, 2017 Assets Current assets Cash and cash equivalents $ 285,185 $ 76,717 Receivables 42,498 43,244 Inventories 241,681 201,644 Prepaid expenses 6,767 9,179 Income tax receivable   97     19,901   Total current assets   576,228     350,685   Other assets, net of amortization 24,466 23,453 Goodwill 137,319 132,806 Property and equipment, net of accumulated depreciation of $1,542,953 at October 31, 2017 and $1,496,472 at April 30, 2017   2,682,169     2,513,158   Total assets $ 3,420,182   $ 3,020,102   Liabilities and Shareholders’ Equity Current liabilities Notes payable to bank $ — $ 900 Current maturities of long-term debt 15,434 15,421 Accounts payable 307,110 293,903 Accrued expenses   145,085     136,322   Total current liabilities   467,629     446,546   Long-term debt, net of current maturities 1,299,626 907,356 Deferred income taxes 461,667 440,124 Deferred compensation 16,102 15,784 Other long-term liabilities   20,826     19,672   Total liabilities   2,265,850     1,829,482   Total shareholders’ equity   1,154,332     1,190,620   Total liabilities and shareholders’ equity $ 3,420,182   $ 3,020,102    

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.

  Summary by Category (Amounts in thousands) Three months ended 10/31/2017   Fuel  

Grocery & OtherMerchandise

 

Prepared Food& Fountain

  Other   Total Revenue $ 1,306,246 $ 572,151 $ 261,998 $ 13,350 $ 2,153,745 Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 110,686 $ 183,133 $ 160,510 $ 13,328 $ 467,657 8.5 % 32.0 % 61.3 % 99.8 % 21.7 % Fuel gallons 561,692 Three months ended 10/31/2016 Revenue $ 1,113,351 $ 544,799 $ 248,345 $ 13,560 $ 1,920,055 Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 99,060 $ 174,590 $ 156,329 $ 13,539 $ 443,518 8.9 % 32.0 % 62.9 % 99.8 % 23.1 % Fuel gallons 531,216   Summary by Category (Amounts in thousands) Six months ended 10/31/2017 Fuel

Grocery & OtherMerchandise

Prepared Food& Fountain

Other Total Revenue $ 2,527,231 $ 1,169,565 $ 523,838 $ 26,850 $ 4,247,484 Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 219,898 $ 373,497 $ 324,155 $ 26,804 $ 944,354 8.7 % 31.9 % 61.9 % 99.8 % 22.2 % Fuel gallons 1,126,739 Six months ended 10/31/2016 Revenue $ 2,260,395 $ 1,110,973 $ 492,001 $ 26,765 $ 3,890,134 Revenue less cost of goods sold (exclusive of depreciation and amortization) $ 203,489 $ 353,717 $ 309,381 $ 26,726 $ 893,313 9.0 % 31.8 % 62.9 % 99.9 % 23.0 % Fuel gallons 1,067,180       Fuel Gallons Fuel Margin Same-store Sales (Cents per gallon, excluding credit card fees)   Q1   Q2   Q3   Q4  

FiscalYear

  Q1   Q2   Q3   Q4  

FiscalYear

F2018 1.7 % 1.9 % F2018

19.3

¢

19.7

¢

F2017 3.1 3.7 2.6 % (0.5 )% 2.1 % F2017 19.5 18.6

17.9

¢

17.2

¢

18.4

¢

F2016 3.4 3.3 1.6 4.6 3.0 F2016 17.5 24.7 18.1 17.8 19.6   Grocery & Other Merchandise Grocery & Other Merchandise Same-store Sales Margin Q1 Q2 Q3 Q4

FiscalYear

Q1 Q2 Q3 Q4

FiscalYear

F2018 3.1 % 2.5 % F2018 31.9 % 32.0 % F2017 4.7 3.1 3.0 % 1.5 % 2.9 % F2017 31.6 32.0 31.1 % 31.1 % 31.5 % F2016 7.7 6.6 7.7 9.7 7.8 F2016 32.6 31.5 31.2 32.1 31.9   Prepared Food & Fountain Prepared Food & Fountain Same-store Sales Margin Q1 Q2 Q3 Q4

FiscalYear

Q1 Q2 Q3 Q4

FiscalYear

F2018 3.7 % 2.1 % F2018 62.5 % 61.3 % F2017 5.1 5.1 5.8 % 3.2 % 4.8 % F2017 62.8 62.9 61.7 % 61.7 % 62.3 % F2016 10.3 9.4 6.0 8.2 8.4 F2016 62.5 63.4 62.0 61.9 62.5  

Corporate information is available at this Web site: http://www.caseys.com. Earnings will be reported during a conference call on December 12, 2017. The call will be broadcast live over the Internet at 9:30 a.m. CST via the Press and Documents section of our Web site and will be available in an archived format.

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Casey’s General Stores, Inc.Bill Walljasper, 515-965-6505