Casey’s(CASY) - 2024 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents Casey's unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed notes Condensed Consolidated Balance Sheets Balance Sheet Summary (as of Jan 31, 2024 vs Apr 30, 2023) | Metric | Jan 31, 2024 ($ in thousands) | Apr 30, 2023 ($ in thousands) | | :--- | :--- | :--- | | Total Current Assets | 781,004 | 920,955 | | Total Assets | 6,207,014 | 5,943,270 | | Total Current Liabilities | 880,906 | 927,125 | | Total Liabilities | 3,259,553 | 3,282,604 | | Total Shareholders' Equity | 2,947,461 | 2,660,666 | Condensed Consolidated Statements of Income Income Statement Highlights (Three Months Ended Jan 31) | Metric | 2024 ($ in thousands) | 2023 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 3,329,247 | 3,332,555 | -0.1% | | Net Income | 86,933 | 100,112 | -13.2% | | Diluted EPS | $2.33 | $2.67 | -12.7% | Income Statement Highlights (Nine Months Ended Jan 31) | Metric | 2024 ($ in thousands) | 2023 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 11,262,898 | 11,765,774 | -4.3% | | Net Income | 414,952 | 390,599 | +6.2% | | Diluted EPS | $11.09 | $10.42 | +6.4% | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Nine Months Ended Jan 31, 2024 vs 2023) | Cash Flow Activity | 2024 ($ in thousands) | 2023 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 604,600 | 636,593 | | Net cash used in investing activities | (602,184) | (300,949) | | Net cash used in financing activities | (203,404) | (81,323) | | Net (decrease) increase in cash | (200,988) | 254,321 | Notes to Unaudited Condensed Consolidated Financial Statements - During the nine months ended January 31, 2024, the Company acquired 105 stores, recognizing $31.8 million in goodwill, with these acquisitions contributing approximately $106.4 million in revenue for the period[83][86] - The company is involved in a lawsuit (McColley v. Casey's General Stores, Inc.) regarding the classification of Store Managers under the FLSA, with management believing adequate provisions have been made and the outcome will not be materially adverse[88] - As of January 31, 2024, the company had forward contracts for cheese running through July 2024, with a total commitment of approximately $35.4 million[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 and nine-month fiscal 2024 financial performance, covering sales, fuel revenue, operating expenses, liquidity, and capital resources Overview - As of January 31, 2024, the company operated 2,639 convenience stores across 17 states, with a net increase of 118 stores since April 30, 2023, primarily through acquisitions and new constructions[105] - The company's business is seasonal, with higher sales and profitability typically occurring in the first and second fiscal quarters (May-October)[105] Electric Vehicles and Renewable Fuels - The company is developing its electric vehicle (EV) strategy, having installed 170 charging stations at 37 stores across 12 states as of January 31, 2024, focusing on areas with higher consumer EV demand[17] - Casey's remains committed to renewable fuels, with nearly all stores offering at least 10% blended ethanol and 43% of stores offering biodiesel[17] Results of Operations Q3 FY2024 Same-Store Sales vs Q3 FY2023 | Category | Same-Store Sales Growth | | :--- | :--- | | Prepared Food & Dispensed Beverage | +7.5% | | Grocery & General Merchandise | +2.8% | | Fuel Gallons Sold | -0.4% | Three Months Ended January 31, 2024 Compared to Three Months Ended January 31, 2023 - Total revenue for Q3 FY2024 decreased by 0.1% YoY, as a 4.9% decrease in retail fuel revenue (due to an 11.0% drop in average price per gallon) was nearly offset by strong growth in inside-store sales[1] Q3 FY2024 Revenue by Category (in thousands) | Category | Q3 2024 Revenue | Q3 2023 Revenue | % Change | | :--- | :--- | :--- | :--- | | Prepared Food & Dispensed Beverage | $349,411 | $313,524 | +11.4% | | Grocery & General Merchandise | $865,548 | $795,699 | +8.8% | | Fuel | $2,051,674 | $2,157,233 | -4.9% | | Total | $3,329,247 | $3,332,555 | -0.1% | - Operating expenses increased by 10.3% in Q3 FY2024, primarily due to operating 167 more stores and the absence of a one-time legal benefit recorded in the prior year[1] - Net income for Q3 FY2024 decreased by 13.2% to $86.9 million, attributed to a strong fuel margin comparison in the prior year and increased operating and depreciation expenses, partially offset by higher inside-store profitability[27] Nine Months Ended January 31, 2024 Compared to Nine Months Ended January 31, 2023 - Total revenue for the first nine months of FY2024 decreased by 4.3% YoY, driven by a 9.7% decline in retail fuel revenue as the average retail price per gallon fell 13.8%[28] Nine Months FY2024 Revenue by Category (in thousands) | Category | Nine Months 2024 Revenue | Nine Months 2023 Revenue | % Change | | :--- | :--- | :--- | :--- | | Prepared Food & Dispensed Beverage | $1,104,705 | $1,008,338 | +9.6% | | Grocery & General Merchandise | $2,826,914 | $2,635,939 | +7.2% | | Fuel | $7,125,485 | $7,889,495 | -9.7% | | Total | $11,262,898 | $11,765,774 | -4.3% | - Net income for the first nine months of FY2024 increased by 6.2% to $415.0 million, primarily due to higher profitability inside the store, which offset increases in operating and depreciation expenses[30] Use of Non-GAAP Measures - The company uses EBITDA and Adjusted EBITDA as non-GAAP measures to evaluate operating performance, believing them useful for investors and analysts in assessing financial performance and debt service capabilities[3] Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Metric | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $86,933 | $100,112 | $414,952 | $390,599 | | EBITDA | $217,615 | $221,727 | $840,372 | $786,441 | | Adjusted EBITDA | $218,739 | $222,913 | $841,264 | $792,418 | - For Q3 FY2024, Adjusted EBITDA decreased 1.9% YoY, while for the nine-month period, Adjusted EBITDA increased 6.2% YoY[4][6] Liquidity and Capital Resources - The company's primary source of liquidity is cash provided by operations, with the current ratio decreasing to 0.89 to 1 as of January 31, 2024, from 1.10 to 1 a year prior, mainly due to increased acquisition activity and share repurchases[10] - Cash used in investing activities increased significantly to $602.2 million in the first nine months of FY2024 from $300.9 million in the prior year, largely due to a substantial increase in acquisition-related activity[10][57] - Cash used in financing activities increased to $203.4 million from $81.3 million in the prior year, primarily due to $89.8 million in common stock repurchases and higher debt payments[10][57] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate changes on floating-rate debt, mitigated by investing in high-quality credit securities and limiting single-issuer exposure - The company's primary market risk is related to interest rate changes on its floating-rate debt, where a hypothetical 100-basis-point (1%) increase would have an approximate annualized impact of $2.4 million on interest expense[32] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of January 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[97] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[107] PART II OTHER INFORMATION Item 1. Legal Proceedings This section details the McColley v. Casey's General Stores, Inc. lawsuit, alleging misclassification of Store Managers under FLSA, which the company believes will not be materially adverse - The company is a defendant in a lawsuit (McColley v. Casey's General Stores, Inc.) alleging misclassification of Store Managers as exempt employees under the FLSA, believing its classification is proper and potential losses are not material to its financial position[88][115] Item 1A. Risk Factors The company states that there have been no material changes in its risk factors from those disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those previously disclosed in the 2023 Annual Report on Form 10-K[109] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q3 FY2024, the company repurchased 108,127 shares for $30.1 million, with $309.7 million remaining available under the repurchase program as of January 31, 2024 Share Repurchase Activity (Q3 FY2024) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Nov 2023 | 51,370 | $277.62 | | Dec 2023 | 19,923 | $274.37 | | Jan 2024 | 36,834 | $282.14 | | Total | 108,127 | $278.56 | - As of January 31, 2024, $309.7 million remained available for future purchases under the company's share repurchase program, which has no set expiration date[110]