"At the six-month mark, capital expenditures were $115.2 million compared to $75.5 million a year ago for the same period," said Bill Walljasper, senior vice president and CFO. "This was up due to an increase in acquisitions and construction activity. We expect capital expenditures to increase as new-store construction accelerates and we continue to close on more acquisitions."
Ankeny, [image-nocss] Iowa-based Casey's second-quarter 2010 closed in October 2009, about the same time Laval, Quebec-based Alimentation Couche-Tard Inc. made its first unsolicited--and at the time, private--bid to purchase Casey's chain of more than 1,500 stores in the Midwest. Since then, as part of its effort to spurn the hostile takeover move, Casey's has promised to increase shareholder value by growing store sales and growing the chain. (Click here for previous coverage.)
During the second quarter of fiscal 2011, "we opened seven new-store constructions and completed nine acquisitions. Year-to-date, we acquired 10 stores and completed eight new-store constructions," Walljasper reported during an earnings call with stock analysts yesterday. "We also have signed agreements for an additional 74 locations that we expect to close on during the third quarter." Those acquisitions include 44 Kabredlo stores and the 19 stores from Harper's, as previously reported in CSP Daily News.
Meanwhile, Casey's is seeing success with its new store design, which it is rolling out via new construction, rebuilds and store redesigns.
"We anticipate completing a total of 20 new-store constructions by the end of the fiscal year and replacing 15 stores," Walljasper said. "Year-to-date, we have replaced one store and completed 12 major remodels. All of these incorporate the features of the new store design." (Click here to read more about the new store design.)
"We're certainly seeing strong revenue movement in the new-store design," Walljasper said. "When we build a store or replace a store [with] our new store design, when you look at that store base compared to the chain [overall], our gallons are up about 29%, grocery and other merchandise is up about 11%, prepared-food revenue we see a lift of about 62%, cash flow is [up] roughly 22%, and we see customer count net roughly 20% increases as well."
He added, "When you look at replacement stores, when you compare that store to the year prior to replacement, with the first full year after [being rebuilt], we see gallon lifts of about 60%, prepared-food lift 100%, grocery and general merchandise 30% to 40% lift. And we see about a 95% lift in cash flow when we replace a store."
While the remodel program, which kicked off in August, is too new to show results, Walljasper is optimistic they will echo those of new-builds and rebuilds.
"We're very encouraged by those [numbers]. We think that the remodel program can be somewhere in that neighborhood," he said. "We're looking at potentially accelerating the remodel program; we're evaluating that now."
As for shareholder value, Casey's stock has mostly held its value since Couche-Tard bowed out of its takeover bid at the end of September. (Click here for previous CSP Daily News coverage of Casey's and Couche-Tard.)
Through September, Casey's stock was trading on average for between $42 and $44 per share. After October 1, the stock dropped as low as $39.17 per share. This week, the stock price was hovering around $41.50.
Prior to Couche-Tard making its bid for Casey's public in April, Casey's stock was trading for about $32 per share.
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