Casey’s General Stores, Inc. — Q1 FY2023 10-Q
Reporting period: Three months ended July 31, 2022, compared with the three months ended July 31, 2021. Casey’s operated 2,454 stores in 16 states at quarter-end.
Financial and operating performance
| Metric | Q1 FY2023 | Prior-year quarter | Change |
|---|---|---|---|
| Total revenue | $4.455 billion | $3.182 billion | +40.0% |
| Net income | $152.9 million | $119.2 million | +28.3% |
| Diluted EPS | $4.09 | $3.19 | Up $0.90 |
| EBITDA (non-GAAP) | $293.0 million | $245.0 million | +19.6% |
| Adjusted EBITDA (non-GAAP) | $293.2 million | $243.2 million | +20.6% |
| Cash provided by operations | $276.2 million | $241.6 million | +14.3% |
Revenue less cost of goods sold, excluding depreciation and amortization, was $836.3 million, or 18.8% of revenue, versus $723.9 million, or 22.7%. Fuel represented $3.096 billion of revenue and $308.2 million of this contribution; grocery and general merchandise contributed $313.3 million, and prepared food and dispensed beverages contributed $191.0 million.
Same-store fuel gallons fell 2.3%, while average fuel contribution rose to 44.7 cents per gallon from 35.1 cents. Same-store grocery and general merchandise sales increased 5.5%, and prepared food and dispensed beverage sales increased 8.4%. Total fuel gallons sold increased 3.3%, reflecting, in part, 74 more stores than a year earlier. The effective tax rate rose to 24.6% from 23.3%.
Cash, debt, and liquidity
Cash and cash equivalents were $312.4 million at July 31, 2022, up from $158.9 million at April 30. Net cash used in investing was $78.1 million, including $82.1 million of property and equipment purchases and $1.1 million for acquisitions. Financing used $44.6 million, including $16.0 million of debt repayments and $13.1 million of cash dividends.
Current assets were $902.9 million and current liabilities $937.4 million; the current ratio was 0.96. Total debt and finance lease obligations, including current maturities, were approximately $1.673 billion. The $450 million revolving facility and $25 million bank line had no borrowings outstanding; approximately $19 million remained available under the bank line after letters of credit. Management said cash, operating cash flow, and credit availability should be sufficient for working-capital needs.
Material changes, outlook, and risks
- Higher retail fuel prices were the principal driver of revenue growth: average retail fuel price per gallon increased 52.4%. Fuel contribution as a percentage of fuel revenue declined to 10.0% from 11.9%, despite higher cents-per-gallon contribution.
- Prepared-food contribution as a percentage of category revenue decreased to 55.6% from 61.0%, primarily due to higher ingredient costs, especially cheese. Grocery contribution percentage improved to 33.9% from 33.0%.
- Operating expenses increased 13.4%, reflecting store growth, higher same-store credit-card fees associated with high fuel prices, and increased long-term incentive compensation. Management reported continued labor-market and supplier-delivery challenges and expected these to persist through FY2023.
- Fuel prices remained elevated but had begun declining from mid-June. Management cautioned that fuel margins are volatile and may be affected by wholesale prices, interest rates, macroeconomic conditions, and geopolitical disruptions. The filing provides no specific earnings or revenue guidance.
- The company was defending a wage-and-hour suit alleging Store Manager misclassification; approximately 2,001 current or former managers had opted in. The company stated it had provided for probable losses and did not expect the matter to have a material effect.
- The company reported no material changes to previously disclosed risk factors. Other cited risks include supply-chain disruption, labor availability and costs, fuel-price volatility, credit-card fees, competition, and consumer shifts, including incomplete recovery of pre-pandemic store traffic.
Investor facts to verify
- Whether fuel-price and per-gallon margin trends persist, and how they affect same-store gallons and earnings.
- Whether labor costs, staffing, and product availability develop as management expects for FY2023.
- Whether prepared-food margins recover as ingredient costs and retail pricing change.
- Developments in the Store Manager litigation and any changes to estimated contingencies.
- Debt repayments, floating-rate exposure, and available liquidity; the filing estimates a 100-basis-point rate move would change annualized interest expense by about $2.7 million.
- The company made no share repurchases during the quarter; its $400 million authorization remained available.