Casey’s Sees Double Digit Sales Growth

“Despite the challenges impacting our industry, we are optimistic about our ability to continue to drive shareholder value next fiscal year,” says Casey’s CEO.

Casey’s General Stores Inc. has reported earnings for the fourth quarter and the fiscal year ended April 30, 2011.

For the quarter, basic earnings per share were $0.60 compared to $0.43 for the same quarter a year ago. Year to date, basic earnings per share were $2.24 versus $2.30 for the same period last year. The year-end results include approximately $27.4 million in expenses pertaining to the company’s recapitalization plan completed in the second quarter, as well as the unsolicited hostile offer and related actions by Alimentation Couche-Tard Inc.

Excluding this activity from both fiscal years, basic earnings per share would have been $2.65 and $2.38 for fiscal 2011 and 2010 respectively, and $0.60 and $0.51 for the 4th quarter of fiscal 2011 and 2010 respectively.

“We are pleased with our ability to drive double digit gross profit increases across all of our major categories during the fourth quarter,” stated President and CEO Robert Myers. “Despite the challenges impacting our industry, we are optimistic about our ability to continue to drive shareholder value next fiscal year.”

Gasoline—The company’s annual goal was to increase same-store gasoline gallons sold by 1% with an average margin of 13.5 cents per gallon. For the quarter, same-store gallons sold were down 1.9%, adversely impacted by a 30% increase in retail gas prices during the same period. However, the strong gas margin environment continued in the fourth quarter resulting in an average margin of 15.6 cents per gallon. Same-store gallons sold for the year increased 1.6% with an average margin of 15.2 cents.

“The favorable gasoline margin environment continued in the fourth quarter, resulting in a record gas margin for the fiscal year. We anticipate this favorable environment continuing into the first quarter of fiscal 2012,” said Myers. For the year, total gallons sold were up 8.6% to 1.4 billion, while gross profit dollars rose 19% from the prior year.

Grocery & Other Merchandise—Casey’s annual goal was to increase same-store sales 6% with an average margin of 33.9%. For the quarter, same-store sales rose 4.8% with an average margin of 32.1%. For the second consecutive quarter, the company experienced double digit sales growth across all major areas of this category. As a result, total sales in the category were up 14% during the fourth quarter.

“The margin was impacted by a competitive cigarette pricing environment and indirect commodity pressures,” said Myers. “Despite these adversities, we were able to drive gross profit 10.7% in this category during the quarter.”

Total sales for the year are up 11.4% to $1.2 billion. Same-store sales for the year were up 4.6% with an average margin of 32.2%.

Prepared Food & Fountain—The goal for fiscal 2011 was to increase same-store sales 8% with an average margin of 63.1%. For the quarter, same-store sales were up 11.8% with an average margin of 60.2%, down in the same period a year ago primarily due to a rise in commodity costs throughout the category. Gross profit rose over 10% during the quarter primarily due to an increase in total sales of 17.5%

“The retail price increases taken earlier in the quarter along with the new store design and continued promotional activity are driving sales,” stated Myers. “Over the last five years same store sales increases have averaged 8.5% and we expect this strong performance to continue.”

Same store sales for the year were up 7.7% with an average margin of 62.2%. Year to date, total sales were up 13.5% to $415.2 million compared to $365.8 million.

Operating Expenses—For the fiscal year, operating expenses increased 15.5% to $607.6 million. Excluding approximately $16 million in expenses related to the unsolicited hostile offer by Couche-Tard, expenses would have increased 12.4%. For the quarter, operating expenses were up 11.4% driven by a combined increase in credit card fees and fuel expense as well as operating more stores this quarter compared to the same period a year ago.

“The higher retail gas price environment drove credit card fees to a record quarterly amount of over $18 million,” said Myers.

Expansion—The goal for fiscal 2011 was to increase the total number of stores 4-6%. For the year, the company increased the store count nearly 7%, with 20 new store constructions and 89 acquired stores. “We are pleased with the recent acquisition environment and we have written agreements for an additional 33 locations,” said Myers. “In addition to unit growth, we replaced 15 stores and completed 120 major remodels.

Fiscal 2012 Goals—The corporate performance goals for fiscal 2012 are as follows:

• Increase same-store gasoline gallons sold 1% with an average margin of 13.5 cents per gallon.

• Increase same-store grocery and other merchandise sales 5.8% with an average margin of 32.8%.

• Increase same-store prepared food and fountain sales 7.7% with an average margin of 61.8%.

• Increase the total number of stores 4-6%.

Dividends—At its June meeting, the Board of Directors declared a quarterly dividend of $0.15 per share. The dividend is payable Aug. 15, 2011 to shareholders of record on Aug. 1, 2011.

 

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