Casey’s General Stores, Inc. (“Casey’s” or the “Company”) (Nasdaq symbol CASY) today reported diluted earnings per share of $0.91 for the third quarter of fiscal year 2020 ended January 31, 2020, compared to $1.13 per share for the same quarter a year ago. An unfavorable pricing environment compared to the same period a year ago led to lower growth in fuel gross profit dollars. “We are optimistic about the January launch of the Casey’s Rewards program. With strong initial membership growth, we look forward to further developing the connection with our guests through this platform,” said Darren Rebelez, President and Chief Executive Officer. “We are excited to begin executing on the strategic plan we unveiled in January, which we believe will continue to generate shareholder value,” stated Rebelez.
“Third quarter average margin benefited from a favorable product mix shift to higher margin items”
Fuel – For the quarter, average fuel margin was 21.7 cents per gallon, while same-store gallons sold were down 2.0%. Third quarter gross profit dollars increased 1.4% to $124.3 million, and total gallons sold were up 3.3% to 572.7 million gallons. “Despite a challenging demand environment, and comparing against the strongest fuel margin quarter from the prior year, we were able to leverage a more robust price optimization and supply capability to better control the impact of unfavorable market conditions,” said Rebelez. For the nine months ended January 31, 2020, total gallons sold were up 3.2% to 1.8 billion. Same-store gallons sold year to date were down 2.0% with an average margin of 23.0 cents per gallon. In that same period, gross profit dollars increased 14.1% to $416.0 million.
Grocery and Other Merchandise – For the quarter, same-store sales were up 3.5% with average margin of 32.9%. “Third quarter average margin benefited from a favorable product mix shift to higher margin items,” said Rebelez. “Given the changes in the regulatory environment impacting this category, we are pleased with the acceleration in same-store sales.” For the third quarter, total grocery and other merchandise revenue increased 7.1% to $582.4 million, and gross profit dollars increased 10.5% to $191.7 million. Total revenue for the first nine months was up 6.9% to $1.9 billion, while total gross profit dollars grew 7.7% to $627.3 million. Year-to-date same-store sales were up 3.2% with an average margin of 32.5%.
Prepared Food and Fountain – Same-store sales for the quarter were up 2.8% with average margin of 60.2%. “Our same-store sales grew throughout the quarter, and were the strongest results in the last ten quarters. The new technology implemented in the last nine months has allowed us to better reach our guests with attractive promotional offers, which will only be enhanced by the launch of our rewards program, where early results have been encouraging,” said Rebelez. Same-store sales were up 3.0% without the impact of the deferral of revenue from the Casey’s Rewards program. The average margin was adversely impacted by higher commodity costs compared to prior year and increased promotional activity. Total prepared food and fountain revenue increased 6.8% to $273.6 million in the third quarter while gross profit dollars grew to $164.8 million. For the first nine months, total revenue increased 5.7% to $867.4 million while total gross profit dollars grew 3.9% to $530.3 million. Year to date, same-store sales were up 2.1% with an average margin of 61.1%.
Operating Expenses – For the third quarter, total operating expenses increased 10.5% to $377.3 million. Increases in credit card fees and the timing of incentive compensation costs drove 1.9% of the quarterly increase. Year to date, operating expenses were up 8.2%. The increase in total operating expenses for third quarter and year-to-date was primarily attributable to operating 70 more stores than the same quarter in the prior year, and increases in technology costs. Same-store operating expenses excluding credit card fees were up 5.4% for the quarter. “Same-store operating expenses were in line with our expectations as we cycled over several expense reduction initiatives. On a two-year stacked basis, same-store operating expenses excluding credit card fees were up 3.3%. We will continue to be focused on controlling operating expenses as we begin to integrate new capabilities related to our strategic plan,” noted Rebelez.
