Casey's Acquisition Optimism
Midwest retailer ready to build, expand; second distribution center coming to Southeast
ANKENY, Iowa -- In reporting the company's "excellent start" to and strong earnings for first-quarter fiscal 2014, Casey's General Stores Inc. CFO Bill Walljasper noted that the chain is "optimistic about the acquisition pipeline going forward."
As of the end of the quarter, the company opened four new stores and acquired three stores. It also completed five replacement stores. Casey's store count at the end of the quarter was 1,749.
"Our pipeline of new-store constructions and potential acquisitions is as full as it has been in recent history," president and CEO Robert J. Myers saidin releasing the current financials. "Our balance sheet remains very strong and we are well positioned to take advantage of opportunities."
The success of its expansion strategy--which includes new-builds and acquisitions-- depends largely on distribution and logistics.
The company is "on track" and in the "final stages" of due diligence for the location and timing of the opening of a second distribution center to serve additional stores, Walljasper said during the company's earnings conference call on Tuesday.
"Logistically, looking at our current store base [and] growth pattern ... the second distribution center intuitively is going to be somewhere in the southeastern part of our region. That's still being finalized," he said.
When the new distribution center is up and operational, Casey's will "be able to springboard further east into Tennessee and Kentucky and south for that matter. ... It's going to be a situation of us looking at the competitive landscape dynamics in all of those areas to see where the opportunities present themselves, either [for] acquisitions or new store construction." said Walljasper.
"This quarter, we opened four new store constructions, acquired three stores and replaced three more. We also had 19 REIT [real-estate investment trust] commitments for acquisitions that we expect to close on in the near future," he said. "Additionally, we have 31 new stores and 18 replacement stores under construction. We anticipate opening 40 to 45 new store constructions by the end of the fiscal year. ... We see a lot of those stores planned in the Arkansas area."
He said, "We think the new markets that we began to penetrate last fiscal year, that being in Tennessee, Kentucky, a little bit more penetration in Arkansas and North Dakota, offer up a wide opportunity for us. So look for some penetration in those states going forward here in the next--this fiscal year as well as next fiscal year."
Walljasper offered additional details: "We also converted 56 more locations to a 24-hour format, added 57 more stores to the pizza delivery program and completed one major remodel during the first quarter. We plan on adding a total of 100 stores to the pizza delivery program by the end of the fiscal year. We will also convert at least 100 stores to 24 hours and complete 25 major remodels by the end of the fiscal year."
Although for the quarter the chain closed several location, Casey's has no plans to close any more stores. "Now there always could be a situation though when we do acquire small chains, we do tend to close some of those from time to time. But for existing store base, we don't have any plans in that regard," Walljasper said.
Earlier this week, Casey's acquired four locations in a bankruptcy proceeding from Jump Oil Co. Inc. in Missouri.