ANKENY, Iowa -- For the three months ended Jan. 31, 2016, Casey’s General Stores Inc. reported net income of $38.1 million, compared to $39.32 million in the same period for the previous year. For the nine months ended Jan. 31, 2016, Casey’s reported net income of $178.94 million, compared to $139.29 million in the same period for the previous year.
“Total inside gross profit was up over 13% in the third quarter, driven primarily by improved margin performance in our prepared food category,” said chairman and CEO Robert J. Myers. “Our fuel margin per gallon was above our annual goal but still below prior year’s strong results, which impacted diluted earnings per share by approximately 30 cents compared to prior year’s third quarter.”
*Fuel. The company's annual goal for fiscal 2016 is to increase same-store gallons sold 2% with an average margin of 16.7 cents per gallon. For the third quarter, same-store gallons sold were up 1.6% with an average margin of 18.1 cents per gallon. The company sold 15.2 million renewable fuel credits for $9.2 million during the third quarter.
“Fuel margins finished above goal for the third quarter due to elevated RIN [renewable identification number] values as well as a decline in wholesale fuel costs towards the end of the quarter,” said Myers. “Same-store gallons sold dipped slightly below our goal in the third quarter; however, year-to-date same store gallons are up 2.7%.”
Total gallons sold were up 7.1% with an average margin of 20.1 cents per gallon year to date.
- Grocery and Other Merchandise. Casey's annual goal for fiscal 2016 is to increase same-store sales 6.2% with an average margin of 32.1%. For the third quarter, same-store sales were up 7.1% with an average margin of 31.2%.
“Cigarette sales continue to benefit from lower retail fuel prices, and sales in the entire category performed well in the third quarter,” said Myers. “Margin has been slightly impacted by the increased contribution of cigarettes, and performed in line with prior year's third quarter."
For the year, total sales were up 10.2% with an average margin of 31.8%. Year to date, same-store sales were up 7.1%.
- Prepared Food and Fountain. The goal for fiscal 2016 is to increase same-store sales 10.4% with an average margin of 60.8%. Same-store sales for the third quarter were up 6.0% with an average margin of 62.0%.
“The 330-basis-point increase in margin from prior year’s third quarter was primarily due to lower commodity costs, and we have taken advantage of this favorable environment to lock in cheese costs through Dec. 31, 2016,” said Myers. “Challenging weather and strong prior-year sales comparisons resulted in same-store sales falling below goal in this quarter; however, gross profit dollars were up over 16% for the category. We remain optimistic about future growth in this category, as we plan to implement pizza delivery in an additional 45 stores and complete 40 major remodels in the fourth quarter.”
Year to date, total sales were up 13% to $662.4 million compared to the first nine months last year, and gross profit dollars were up 19.5% to $415.2 million. Year to date, same-store sales were up 8.5% with an average margin of 62.7%.
- Operating Expenses. For the third quarter, operating expenses were up 8.7% to $259.6 million. Year to date, operating expenses also increased 8.7% to $791.2 million.
“Both the quarter-to-date and year-to-date increases were primarily driven by operating more stores this year compared to the same periods one year ago, and the continued rollout of 24-hour conversions, pizza delivery service and major remodels,” said Myers. “The company continued to benefit from lower fuel prices during the quarter as the increase in operating expenses was partially offset by a $1.1-million decrease in transportation costs due to lower fuel prices."
The company’s annual goal is to build or acquire 75 to 113 stores, replace 10 existing locations and complete 100 major remodels. As of the end of the third fiscal quarter, the company completed 31 new-store constructions and acquired three stores. The company also completed 11 replacements and 60 major remodels. The company currently has 22 new stores under construction and another 59 sites under contract for future new builds.
“We continue to remain patient with acquisitions, and are excited about our future expansion opportunities as our second distribution center in Terre Haute, Ind., is now operational,” said Myers.
Casey's, based in Ankeny, Iowa, operates more than 1,900 convenience stores in 14 states throughout the Midwest.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.