ANKENY, Iowa -- With its release of "excellent" results for the first quarter of its 2016 fiscal year, Casey's General Stores saw its stock price hit an all-time high of nearly $110 per share Tuesday.
The news came on a report of same-store sales improving 3.4% in gasoline gallons, 10.3% in foodservice and fountain, and 7.0% in grocery and other merchandise.
"The company is off to an excellent start to the fiscal year with strong sales, margin expansion in prepared foods and a favorable operating-expense environment during the period," said Robert J. Myers, chairman and CEO of the convenience-store chain. "Diluted earnings per share increased 23% despite a fuel margin decline of 1.4 cents per gallon compared to the prior year."
Here is a breakdown of the company's results by category:
Fuel: The goal for fiscal 2016 is to increase same-store gallons sold 2% with an average margin of 16.7 cents per gallon. For the first quarter, same-store gallons sold were up 3.4% with an average margin of 17.5 cents per gallon.
"Same-store sales continue to benefit from low retail fuel prices," said Myers. "Wholesale fuel costs were volatile throughout the quarter. Our pricing strategy allows our store managers to respond quickly to local price competition, which helped us maintain volumes and achieve a margin above goal."
The company sold 15.7 million renewable fuel credits for $8 million during the first three months of the year. Total gallons sold for the quarter were up 8% to 501.2 million gallons.
Grocery and Other Merchandise: The company’s annual goal is to increase same-store sales 6.2% with an average margin of 32.1%. For the first quarter, same-store sales were up 7.0% with an average margin of 32.6%.
"Cigarette sales performed well as we experienced volume increases throughout the quarter, especially in our premium brands," said Myers. "The grocery and other merchandise margin is slightly over our annual goal, primarily due to the seasonal sales mix we typically experience in the first quarter." Total sales were up 10.0% to $526.6 million.
Prepared Food and Fountain: The goal for fiscal 2016 is to increase same-store sales 10.4% with an average margin of 60.8%. For the first quarter, same-store sales were up 10.3% with an average margin of 62.5%.
"Many of our strategic initiatives are focused on driving sales to this category," said Myers. "Major remodels, 24-hour conversions and pizza delivery continue to deliver impressive sales gains, and lower ingredient and supply costs enabled us to expand our margin."
Total prepared food and fountain sales were up 14.8% to $223.4 million, and gross profit dollars grew 19.9% to $139.7 million.
Operating Expenses: For the first quarter, operating expenses were $263.6 million compared to $244.3 million for the first quarter a year ago, up 7.9%.
"Credit-card fees and transportation costs combined decreased approximately $2.3 million from a year ago due to lower fuel prices," said Myers. "These reductions were offset by expenses related to operating more stores than a year ago, as well as the various strategic initiatives the company continues to roll out."
Expansion: The company’s annual goal is to build or acquire 75 to 113 stores, replace 10 existing locations and perform major remodels on 100 existing locations. As of the end of the quarter, the company had opened eight new stores, acquired one store, and replaced seven existing stores. The company had 17 major remodels under construction at the end of the quarter, along with 26 new stores and four replacement stores.
"We are pleased with the pace of our new-store construction progress and will continue our patient approach to potential acquisitions," said Myers. "Major remodels have shown to be an excellent initiative that will drive better performance out of our existing store base."
Dividend: At its September meeting, the Board of Directors declared a quarterly dividend of $0.22 per share. The dividend is payable Nov. 16, 2015, to shareholders of record on Nov. 2, 2015.
Casey’s owns and operates 1,887 in 14 Midwestern states, primarily Iowa, Missouri and Illinois.
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