Business Wire | Mar 8, 2021 06:35PM EST

Casey's Third Quarter Diluted EPS Up 14% from Prior Year

Mar. 08, 2021

ANKENY, Iowa--(BUSINESS WIRE)--Mar. 08, 2021--Casey's General Stores, Inc. ("Casey's" or the "Company") (Nasdaq symbol CASY) one of the leading convenience store chains in the United States, today announced financial results for the three and nine months ended January 31, 2021.

Third Quarter Key Highlights

* Diluted EPS of $1.04 compared to $0.91 for the same period a year ago, an increase of 14%. * Fuel gross profit increased 37% with a fuel margin of 32.9 cents per gallon. Fuel same-store gallons sold decreased 12.1% compared to the same period last year. * Inside same-store sales increased 2.1% compared to prior year with a margin of 39.6%. * Digital sales increased 95% compared to prior year. Casey's Rewards now exceeds 3.3 million members. * Casey's private label surpassed 3% of grocery and other merchandise share at quarter's end.

"Casey's grew diluted earnings per share in the third quarter despite a challenging, COVID-19 impacted environment," said Darren Rebelez, President and CEO. "The Company advanced several initiatives in our grocery and other merchandise category that contributed to positive inside sales volume in the quarter and investment in our fuel capabilities yielded favorable results. We continue to effectively manage discretionary operating expenses while investing in our team members' and guests' safety. Our balance sheet remains strong, and we are committed to executing our long-term strategic plan."

Earnings

Three Months Ended Nine Months Ended January January 31, 31,

2021 2020 2021 2020

Net income (in $ 38,627 $ 33,959 $ 271,202 $ 201,755 thousands)

Diluted earnings per $ 1.04 $ 0.91 $ 7.28 $ 5.43 share

Adjusted EBITDA (in $ 127,382 $ 120,391 $ 588,368 $ 491,175 thousands)

Net income, diluted EPS, and Adjusted EBITDA (reconciled later in the document) in the third quarter were greater than prior year due to higher fuel margin and decreased interest expense, partially offset by lower inside gross profit and higher operating expenses. The Company operated 36 more stores than the prior year period.

Fuel

Three Months Ended Nine Months Ended January January 31, 31,

2021 2020 2021 2020

Fuel gallons sold (in 518,408 572,746 1,645,497 1,805,901 thousands)

Same-store gallons sold (12.1 ) (2.0 ) (11.9 ) (2.0 ) % % % %

Fuel gross profit (in $ 170,399 $ 124,257 $ 584,584 $ 416,045 thousands)

Fuel margin (cents pergallon, excluding 32.9 ? 21.7 ? 35.5 ? 23.0 ?credit card fees)

Same-store gallons sold were adversely impacted by lower guest traffic due to the COVID-19 pandemic. The Company's overall fuel gross profit was 37% higher than the previous third quarter, driven in part by Casey's centralized fuel team and its ability to navigate the complex environment within the fuel marketplace. The Company sold $6.9 million in renewable fuel credits in the third quarter, an increase of $5.2 million from the prior year.

Inside

Three Months Ended Nine Months Ended January 31, January 31,

2021 2020 2021 2020

Inside sales (in $ 888,483 $ 856,037 $ 2,898,157 $ 2,798,239 thousands)

Inside same-store 2.1 % 3.3 % 1.6 % 2.8 %sales

Grocery and othermerchandise 5.4 % 3.5 % 5.1 % 3.2 %same-store sales increase

Prepared food andfountain same-store (5.0 ) 2.8 % (6.1 ) 2.1 %sales (decrease) % %increase

Inside gross profit $ 351,490 $ 356,487 $ 1,161,390 $ 1,157,537 (in thousands)

Inside margin 39.6 % 41.6 % 40.1 % 41.4 %

Grocery and other 30.7 % 32.9 % 32.1 % 32.5 %merchandise margin

Prepared food and 60.6 % 60.2 % 60.1 % 61.1 %fountain margin

Inside same-store sales were driven by strong performance in alcohol, packaged beverages, and whole pizza pies, offset by weakened demand in the bakery and dispensed beverage categories. Inside margin was adversely impacted by mix shift, both within and across categories. In addition, the Company discounted select merchandise in conjunction with a major store reset that took place throughout the chain in the third quarter. The reset expanded selling space throughout the store to drive key categories, optimized category flow and adjacencies, and enabled the rapid expansion of our private brand program.

Operating Expenses

Three Months Ended Nine Months Ended January 31, January 31,

2021 2020 2021 2020

Operating expenses $ 414,448 $ 377,330 $ 1,210,884 $ 1,130,554 (in thousands)

Credit card fees $ 34,365 $ 35,570 $ 108,385 $ 114,656 (in thousands)

Same-storeoperating expense 5.6 % 5.4 % 1.8 % 3.8 %excluding credit card fees

Operating expenses for the third quarter were up primarily due to operating 36 more stores than this time last year, as well as incurring $11 million in COVID-19 related expenses, $10 million in incremental incentive compensation due to strong financial performance of the Company, $3 million in labor costs associated with the major store reset noted above, offset by a reduction in credit card fees and a 5% reduction in same-store labor hours, after adjusting for the store reset and COVID-19 related pay.

Expansion

Store Count

Stores at 4/30/2020 2,207

New store construction 27

Acquisitions 3

Acquisitions not opened (2)

Prior acquisitions opened 2

Closed (8)

Stores at 1/31/2021 2,229

In connection with the previously disclosed pending Buchanan Energy acquisition, Casey's and Buchanan Energy received a Request for Additional Information from the Federal Trade Commission ("FTC"). Casey's is cooperating with the FTC and does not expect its review to have a material impact on the acquisition. The Company also expects to complete the construction of approximately 40 new stores this fiscal year.

LiquidityAt January 31, the Company had approximately $865 million in available liquidity, consisting of approximately $390 million in cash and cash equivalents on hand and $475 million in undrawn borrowing capacity on existing lines of credit. During the quarter, the Company amended its existing Credit Agreement to include a term loan of up to $300 million. The term loan along with existing cash and lines of credit, will be used to fund the pending Buchanan Energy acquisition.

Share RepurchaseThe Company has $300 million remaining under its existing share repurchase program which expires in April 2022. There were no repurchases made against that authorization in the third quarter.

DividendAt its March meeting, the Board of Directors voted to pay a quarterly dividend of $0.34 per share. The dividend is payable May 17, 2021 to shareholders of record on May 3, 2021.

Casey's General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended January Nine Months Ended January 31, 31,

2021 2020 2021 2020

Total revenue $ 2,008,028 $ 2,248,198 $ 6,328,954 $ 7,362,413

Cost of goodssold (exclusiveof depreciationand 1,467,847 1,751,335 4,533,510 5,742,799 amortization, shownseparatelybelow)

Operating 414,448 377,330 1,210,884 1,130,554 expenses

Depreciationand 65,185 63,285 195,299 185,981 amortization

Interest, net 11,469 13,209 35,510 39,613

Income before 49,079 43,039 353,751 263,466 income taxes

Federal andstate income 10,452 9,080 82,549 61,711 taxes

Net income $ 38,627 $ 33,959 $ 271,202 $ 201,755

Net income per common share

Basic $ 1.04 $ 0.92 $ 7.33 $ 5.47

Diluted $ 1.04 $ 0.91 $ 7.28 $ 5.43

Basic weighted 37,042,544 36,920,960 37,017,656 36,901,338 average shares

Plus effect ofstock 241,047 221,917 240,962 221,187 compensation

Dilutedweighted 37,283,591 37,142,877 37,258,618 37,122,525 average shares

Casey's General Stores, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

January 31, April 30, 2021 2020

Assets

Current assets

Cash and cash equivalents $ 388,946 $ 78,275

Receivables 66,617 48,500

Inventories 271,421 236,007

Prepaid expenses 17,794 9,801

Income taxes receivable - 14,667

Total current assets 744,778 387,250

Other assets, net of amortization 78,210 71,766

Goodwill 161,075 161,075

Property and equipment, net of accumulateddepreciation of $2,151,436 at January 31, 2021 3,412,924 3,323,801 and $2,037,708 at April 30, 2020

Total assets $ 4,396,987 $ 3,943,892

Liabilities and Shareholders' Equity

Current liabilities

Lines of credit $ - $ 120,000

Current maturities of long-term debt and 2,327 570,280 finance lease obligations

Accounts payable 332,103 184,800

Accrued expenses 245,519 188,348

Income taxes payable 1,877 -

Total current liabilities 581,826 1,063,428

Long-term debt and finance lease obligations, 1,362,076 714,502 net of current maturities

Deferred income taxes 449,152 435,598

Deferred compensation 14,636 13,604

Insurance accruals, net of current portion 21,103 22,862

Other long-term liabilities 74,605 50,693

Total liabilities 2,503,398 2,300,687

Total shareholders' equity 1,893,589 1,643,205

Total liabilities and shareholders' equity $ 4,396,987 $ 3,943,892

Casey's General Stores, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

Nine months ended January 31,

2021 2020

Cash flows from operating activities:

Net income $ 271,202 $ 201,755

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 195,299 185,981

Amortization of debt issuance costs 1,258 -

Share-based compensation 22,009 14,394

Loss on disposal of assets and impairment charges 3,808 2,115

Deferred income taxes 13,554 39,454

Changes in assets and liabilities:

Receivables (18,117 ) (8,527 )

Inventories (35,238 ) 10,207

Prepaid expenses (7,993 ) (6,937 )

Accounts payable 124,026 (53,534 )

Accrued expenses 56,228 12,737

Income taxes 18,363 9,204

Other, net 18,680 (7,142 )

Net cash provided by operating activities 663,079 399,707

Cash flows from investing activities:

Purchase of property and equipment (263,077 ) (363,907 )

Payments for acquisition of businesses, net of (5,780 ) (12,644 )cash acquired

Proceeds from sales of property and equipment 4,823 3,813

Net cash used in investing activities (264,034 ) (372,738 )

Cash flows from financing activities:

Proceeds from long-term debt 650,000 -

Payments of long-term debt (570,999 ) (9,329 )

Payments of debt issuance costs (5,525 ) -

Net (payments) borrowings of short-term debt (120,000 ) 1,000

Proceeds from exercise of stock options 1,665 2,392

Payments of cash dividends (35,410 ) (34,178 )

Tax withholdings on employee share-based awards (8,105 ) (6,611 )

Net cash used in financing activities (88,374 ) (46,726 )

Net increase (decrease) in cash and cash 310,671 (19,757 )equivalents

Cash and cash equivalents at beginning of the 78,275 63,296 period

Cash and cash equivalents at end of the period $ 388,946 $ 43,539

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Nine months ended January 31,

2021

2020

Cash paid during the period for:

Interest, net of amount capitalized

$

32,862

$

33,636

Income taxes, net

48,137

10,800

Noncash investing and financing activities:

Purchased property and equipment in accounts payable

28,605

9,813

Non-cash additions from adoption of ASC 842

-

22,635

SUPPLEMENTAL DISCLOSURES OF CASH FLOWSINFORMATION

Nine months ended January 31,

2021 2020

Cash paid during the period for:

Interest, net of amount capitalized $ 32,862 $ 33,636

Income taxes, net 48,137 10,800

Noncash investing and financing activities:

Purchased property and equipment in accounts 28,605 9,813 payable

Non-cash additions from adoption of ASC 842 - 22,635

Summary by Category (Amounts in thousands)

Three months ended January 31, 2021

Fuel

Grocery & OtherMerchandise

Prepared Food& Fountain

Other

Total

Revenue

$

1,100,875

$

624,465

$

264,018

$

18,670

$

2,008,028

Gross profit

$

170,399

$

191,502

$

159,988

$

18,292

$

540,181

15.5

%

30.7

%

60.6

%

98.0

%

26.9

%

Fuel gallons sold

518,408

Three months ended January 31, 2020

Revenue

$

1,376,018

$

582,407

$

273,630

$

16,143

$

2,248,198

Gross profit

$

124,257

$

191,692

$

164,795

$

16,119

$

496,863

9.0

%

32.9

%

60.2

%

99.9

%

22.1

%

Fuel gallons sold

572,746

Summary by Category (Amounts in thousands)

Threemonths Grocery & Preparedended Fuel Other Food Other TotalJanuary Merchandise & Fountain31,2021

Revenue $ 1,100,875 $ 624,465 $ 264,018 $ 18,670 $ 2,008,028

Gross $ 170,399 $ 191,502 $ 159,988 $ 18,292 $ 540,181 profit

15.5 % 30.7 % 60.6 % 98.0 % 26.9 %

Fuelgallons 518,408 sold

Threemonthsended January 31,2020

Revenue $ 1,376,018 $ 582,407 $ 273,630 $ 16,143 $ 2,248,198

Gross $ 124,257 $ 191,692 $ 164,795 $ 16,119 $ 496,863 profit

9.0 % 32.9 % 60.2 % 99.9 % 22.1 %

Fuelgallons 572,746 sold

Summary by Category (Amounts in thousands)

Nine months ended January 31, 2021

Fuel

Grocery & OtherMerchandise

Prepared Food& Fountain

Other

Total

Revenue

$

3,380,348

$

2,074,552

$

823,605

$

50,449

$

6,328,954

Gross profit

$

584,584

$

666,093

$

495,297

$

49,470

$

1,795,444

17.3

%

32.1

%

60.1

%

98.1

%

28.4

%

Fuel gallons sold

1,645,497

Nine months ended January 31, 2020

Revenue

$

4,518,061

$

1,930,886

$

867,353

$

46,113

$

7,362,413

Gross profit

$

416,045

$

627,278

$

530,259

$

46,032

$

1,619,614

9.2

%

32.5

%

61.1

%

99.8

%

22.0

%

Fuel gallons sold

1,805,901

Summary by Category (Amounts in thousands)

Ninemonths Grocery & Preparedended Fuel Other Food Other TotalJanuary Merchandise & Fountain31,2021

Revenue $ 3,380,348 $ 2,074,552 $ 823,605 $ 50,449 $ 6,328,954

Gross $ 584,584 $ 666,093 $ 495,297 $ 49,470 $ 1,795,444 profit

17.3 % 32.1 % 60.1 % 98.1 % 28.4 %

Fuelgallons 1,645,497 sold

Ninemonthsended January 31,2020

Revenue $ 4,518,061 $ 1,930,886 $ 867,353 $ 46,113 $ 7,362,413

Gross $ 416,045 $ 627,278 $ 530,259 $ 46,032 $ 1,619,614 profit

9.2 % 32.5 % 61.1 % 99.8 % 22.0 %

Fuelgallons 1,805,901 sold

Fuel Gallons

Fuel Margin

Same-store Sales

(Cents per gallon, excluding credit card fees)

Q1

Q2

Q3

Q4

Fiscal Year

Q1

Q2

Q3

Q4

Fiscal Year

F2021

(14.6

)%

(8.6

)%

(12.1

)%

-

-

F2021

38.2

?

35.3

?

32.9

?

-

-

F2020

(2.0

)

(1.8

)

(2.0

)

(14.7

)%

(5.1

)%

F2020

24.4

22.9

21.7

40.8

?

26.8

?

F2019

0.5

(1.1

)

(3.4

)

(2.8

)

(1.7

)

F2019

20.5

20.0

22.1

18.6

20.3

Fuel Gallons Fuel Margin

Same-store Sales (Cents per gallon, excluding credit card fees)

Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal Year Year F2021 (14.6 ) (8.6 ) (12.1 ) - - F2021 38.2 ? 35.3 ? 32.9 ? - - % % %

F2020 (2.0 ) (1.8 ) (2.0 ) (14.7 ) (5.1 ) F2020 24.4 22.9 21.7 40.8 ? 26.8 ? % %

F2019 0.5 (1.1 ) (3.4 ) (2.8 ) (1.7 ) F2019 20.5 20.0 22.1 18.6 20.3

Grocery & Other Merchandise

Grocery & Other Merchandise

Same-store Sales

Margin

Q1

Q2

Q3

Q4

Fiscal Year

Q1

Q2

Q3

Q4

Fiscal Year

F2021

3.6

%

6.6

%

5.4

%

-

-

F2021

32.2

%

33.3

%

30.7

%

-

-

F2020

3.2

3.2

3.5

(2.0

)%

1.9

%

F2020

31.3

33.3

32.9

30.4

%

32.0

%

F2019

3.2

2.7

3.4

5.7

3.6

F2019

32.4

32.4

31.9

31.5

32.1

Grocery & Other Merchandise Grocery & Other Merchandise

Same-store Sales Margin

Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal Year Year F2021 3.6 % 6.6 % 5.4 % - - F2021 32.2 % 33.3 % 30.7 % - -

F2020 3.2 3.2 3.5 (2.0 ) 1.9 % F2020 31.3 33.3 32.9 30.4 % 32.0 % %

F2019 3.2 2.7 3.4 5.7 3.6 F2019 32.4 32.4 31.9 31.5 32.1

Prepared Food & Fountain

Prepared Food & Fountain

Same-store Sales

Margin

Q1

Q2

Q3

Q4

Fiscal Year

Q1

Q2

Q3

Q4

Fiscal Year

F2021

(9.8

)%

(3.6

)%

(5.0

)%

-

-

F2021

59.7

%

60.1

%

60.6

%

-

-

F2020

1.6

1.9

2.8

(13.5

)%

(1.5

)%

F2020

62.2

60.9

60.2

60.0

%

60.9

%

F2019

1.7

2.2

1.5

2.0

1.9

F2019

62.0

62.4

62.3

62.2

62.2

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by the Company for internal purposes including our capital budgeting process, evaluating acquisition targets, assessing performance, and awarding incentive compensation.

Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended January 31, 2021 and 2020:

Prepared Food & Fountain Prepared Food & Fountain

Same-store Sales Margin

Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal Year Year F2021 (9.8 ) (3.6 ) (5.0 ) - - F2021 59.7 % 60.1 % 60.6 % - - % % %

F2020 1.6 1.9 2.8 (13.5 ) (1.5 ) F2020 62.2 60.9 60.2 60.0 % 60.9 % % %

F2019 1.7 2.2 1.5 2.0 1.9 F2019 62.0 62.4 62.3 62.2 62.2

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by the Company for internal purposes including our capital budgeting process, evaluating acquisition targets, assessing performance, and awarding incentive compensation.

Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended January 31, 2021 and 2020:

(In thousands) Three Months Ended Nine Months Ended January January 31, 31,

2021 2020 2021 2020

Net income $ 38,627 $ 33,959 $ 271,202 $ 201,755

Interest, net 11,469 13,209 35,510 39,613

Depreciation and 65,185 63,285 195,299 185,981 amortization

Federal and state 10,452 9,080 82,549 61,711 income taxes

EBITDA $ 125,733 $ 119,533 $ 584,560 $ 489,060

Loss on disposal ofassets and impairment 1,649 858 3,808 2,115 charges

Adjusted EBITDA $ 127,382 $ 120,391 $ 588,368 $ 491,175

NOTES:

* Gross Profit is defined as revenue less cost of goods sold (exclusive of depreciation and amortization) * Inside is defined as the combination of Grocery and Other Merchandise and Prepared Food and Fountain

This release contains statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to the pending Buchanan Energy acquisition, expectations for future periods, possible or assumed future results of operations, financial conditions, liquidity and related sources or needs, business and/or integration strategies, plans and synergies, supply chain, growth opportunities, performance at our stores, and the potential effect of COVID-19. There are a number of known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any future results expressed or implied by those forward-looking statements, including but not limited to the timing and integration of the pending Buchanan Energy acquisition, executing our strategic plan, the impact and duration of COVID-19 and related governmental actions, as well as other risks, uncertainties and factors which are described in the Company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission and available on our website. Any forward-looking statements contained in this release represent our current views as of the date of this release with respect to future events, and Casey's disclaims any intention or obligation to update or revise any forward-looking statements in the release whether as a result of new information, future events, or otherwise.

Corporate information is available at this website: https://www.caseys.com. Earnings will be reported during a conference call on March 9, 2021. The call will be broadcast live over the Internet at 7:30 a.m. CST. To access the call, go to the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx. No access code is required. A webcast replay of the call will remain available in an archived format on the Events and Presentations section of our website at https://investor.caseys.com/events-and-presentations/default.aspx for one year after the call.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210308005928/en/

CONTACT: Investor Relations Contact: Brian Johnson (515) 965-6587

CONTACT: Media Relations Contact: Katie Petru (515) 446-6772