Casey's General Store (CASY 126.72, +9.93, +8.50%)
is higher after beating quarterly earnings expectations.
The operator of gas stations and convenience stores in 16 Midwestern states reported above-consensus first quarter earnings of $1.90 per share on a 23.6% year/year jump in revenue to $2.59 bln, which was also ahead of estimates.
In addition to reporting earnings, management noted that the company's value creation plan remains on track. Looking to optimize fuel sales, the company has finalized contracts with separate vendors for fuel and inside price optimization. The company planned to begin a pilot program for fuel price optimization in the second quarter.
Same-store Fuel sales increased 0.5% with an average margin of 20.5 cents per gallon. The increase was slower than the company had expected, but total sales outpaced sales at Casey's peers. Total gallons sold increased 6.5% to 601.80 mln gallons during the quarter while gross profit dollars grew 13.1% to $123.50 mln.
Grocery and other merchandise same-store sales grew 3.2% with an average margin of 32.4%. Higher margin product lines like packaged beverages drove the overall increase. In total, grocery and other merchandise revenue grew 7.9% year/year to $644.80 mln while gross profit improved almost 10.0% to $208.90 mln.
Prepared Food and Fountain same-store sales increase grew 1.7% with an average margin of 62.0%. Strength in breakfast foods helped offset weakness in the bakery category. Increased investment in pizza promotions had little impact on margin. In total, prepared food and fountain revenue grew 7.3% to $281.00 mln while gross profit grew 6.4% to $174.20 mln.
The company's store count increased by 12 during the quarter to 2,085. The company opened 15 new locations and one prior acquisition while closing four locations.
Going forward, the company expects that same-store fuel sales for the fiscal year will increase between 1.5% and 3.0% with an average margin between 18.5% and 20.5%. Grocery and other merchandise same-store sales are also expected to increase between 1.5% and 3.0% with an average margin between 31.5% and 32.5%. Prepared Food and Fountain same store sales are expected to grow between 1.5% and 3.5% with an average margin between 60.0% and 62.0%. Operating expenses are expected between 8.5% and 10.5% of revenue for the fiscal year.
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