CASY

Caseys General Stores, Inc. (CASY)

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Casey’s General Stores, Inc. (CASY)

F2Q10 Earnings Call

December 8, 2009; 10:30 am ET

Executives

Bill Walljasper - Chief Financial Officer

Bob Myers - President & Chief Executive Officer

Analysts

Irene Nattel - RBC Capital Market

Kelly Bania - Banc of America

Ben Brownlow - Morgan Keegan

Anthony Lebiedzinski - Sidoti & Co.

Megan O’Hara – BMO

Alex Bison - North Coast Research

Michael Smith - Kansas City Capital

Presentation

Operator

Good day ladies and gentlemen and welcome to the second quarter 2010 Casey’s General Store earnings conference call. My name is Eric and I will be your audio coordinator for today. At this time all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the presentation. (Operator Instructions)

I’d now like to turn your presentation over to your host Mr. Bill Walljasper, Chief Financial Officer. Please proceed, sir.

Bill Walljasper

Good morning and thank you for joining us to discuss Casey’s results for the second quarter of fiscal 2010 ended October 31. I’m Bill Walljasper, Chief Financial Officer; Bob Myers, President and Chief Executive Officer are also here.

I hope all of you had an opportunity to see the press release. If you haven’t, please let me know and I’ll make sure a copy is forwarded to you. Before I begin, I will remind you that certain statements may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

As discussed in the press release and the 2009 Annual Report, such forward-looking statements involve known and unknown risk, uncertainties and other factors that may cause actual results to differ materially from future results expressed or implied by those statements. Casey’s disclaims any intention or obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.

I’ll take a few minutes to summarize the quarter and then open for questions. As you’ve already seen basic earnings per share rose over 22% to $0.66 compared to $0.54 a year ago. For the six months earnings were $1.53 per share compared to a $1.11 a year ago. Earnings in the quarter were driven by a higher than normal gasoline margin and margin expansion inside the store.

The strong gasoline margin environment continued in the second quarter resulting in the margin of $14.03 per gallon compare to $13.07 last year in the same period. This marks the ninth quarter out of the last 10, but we have experienced a gas margin over $0.12 per gallon. At six months mark our margin was $0.15 per gallon. Total gallon sold for the quarter were up 2% to $323.7 million compare to $317.3 million a year ago.

Year-to-date total gallon sold were up 3.8% to nearly $660 million while same store sales in the six month mark were up 1.2%. Same store gallon in the quarter were affected by decreased customer count in the later part of the quarter due to unusually cold and raining conditions. As a result same store gallons were down 0.7%. For the quarter gasoline gross profit was up 6% to $46.1 million.

Same store gallons are trending down in November due primarily to higher retail prices year-over-year. The average retail price in November last year was a $1.68 per gallon compare to around $2.45 today. However the favor gasoline margin continues in November. The grocery and general merchandise category is performing well. Total sales in the second quarter were up over 4% to $276.1 million with an average margin up 34.1% up over 20 basis points from the prior year.

The margin expansion primarily come from the cigarette area as resulted an increased tax contribution that rose to over 73% compare to approximately 67% in a second quarter a year ago. Same store sales in a quarter were up 1.9% while gross profit rose 4.7% to $94.1 million. Year-to-date same store sales were up 4.1% with an average margin of 34.2 ahead of our annual goal. Weather during the quarter held back sales especially in the beer and beverage area.

We also saw shift to more mid tier brands in these areas. Same store sales are improving in November as weather patterns return to more normalize levels. The prepared food and fountain category continues to strong performance. Total sales in the quarter were up nearly 8% to $94.9 million. Same store sales in the quarter were up 3.4% with an average margin of $64.6 up over 400 basis points from the same time last year.

This is primarily due to a lower cost of cheese and other products as well as an increased contribution from the fountain area as we continue to expand our fountain coffee offerings. The average cost of cheese this quarter was a $1.68 compare to $2.10 a year ago. Year-to-date same store sales were up 5% with an average margin of 64.2% significantly ahead of our annual goal.

These are outstanding numbers in light of the difficult comparisons from last year and poor weather mentioned previously. Similar to the grocery other merchandise category same store sales November are improving. At the six month mark operating expenses were up 1.3% for the quarter operating expenses were up 2.8% primarily due to moderate increases in wages insurance and utilities, which we were able to offset with some decreases with 30% drop in fuel expenses and 6.4% dropping credit cards fees.

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