Market Overview

Casey's Reports First Quarter Results; Expansion Activity Accelerates

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Casey's General Stores, Inc. (Nasdaq symbol CASY) today reported diluted
earnings per share of $1.46 for the first quarter of fiscal 2018 ended
July 31, 2017, compared to $1.70 per share for the same quarter a year
ago. Changes in vesting provisions that accelerated expense in the
current grant awards under the long-term stock incentive plan, combined
with increases to Illinois state tax rates lowered diluted earnings by
$0.17 per share. "Expansion activity for new store construction
continues to increase as there are now 179 sites either under
construction or under agreement," said Terry Handley, President and CEO.
"We are well positioned to sustain a higher level of unit growth in
fiscal 2018 and beyond."

Fuel - The Company's fiscal 2018 guidance was to increase
same-store gallons sold 1.0% to 2.0% with an average margin of 18.0 to
20.0 cents per gallon. For the quarter, same-store gallons sold were up
1.7% with an average margin of 19.3 cents per gallon. "Same-store
gallons sold for the quarter benefited from continued low retail fuel
prices," said Handley. The Company sold 15.7 million renewable fuel
credits for $10.5 million during the first quarter. Total gallons sold
for the quarter were up 5.4% to 565.0 million gallons while gross profit
dollars increased 4.6% to $109.2 million.

Grocery and Other Merchandise - The Company's fiscal 2018
guidance was to increase same-store sales 2.0% to 4.0% with an average
margin of 31.0% to 32.0%. For the quarter, same-store sales were up 3.1%
with an average margin of 31.9%. "Both same-store sales and average
margin were within the annual performance guidance," stated Handley,
"and we continue to outpace other retailers in the industry." For the
first quarter, total grocery and other merchandise revenue increased
5.5% to $597.4 million, and gross profit dollars were up 6.3% to $190.4
million.

Prepared Food and Fountain - The fiscal 2018 guidance was to
increase same-store sales 5.0% to 7.0% with an average margin of 61.5%
to 62.5%. Same-store sales for the quarter were up 3.7% with an average
margin of 62.5%. "Like others in the broader food service industry have
reported, we experienced a softening of traffic, particularly in the
month of July," said Handley. Total prepared food and fountain revenue
increased 7.5% to $261.8 million in the first quarter while gross profit
dollars grew 6.9% to $163.6 million.

Operating Expenses - Casey's fiscal 2018 guidance was a 9.0% to
11.0% increase in total operating expenses. For the first quarter, total
operating expenses increased 10.0% to $321.2 million. The increase was
primarily attributable to increases in employee-related costs from
operating more stores and implementing growth programs in more stores
compared to the first quarter a year ago, and a $7.3 million incremental
accelerated expense recognized due to changes in vesting provisions in
the current year grant awards under the long-term stock incentive plan.
"Total expense for the new grants is expected to be comparable with
previous grants; however, changes in provisions of the award agreement
accelerated the recognition of expense," stated Handley. Excluding the
$7.3 million increase, total operating expenses were up 7.5% for the
quarter. Store level operating expenses for open stores not impacted by
recent growth programs were up 3.9% for the quarter, compared to 6.6%
for all of fiscal 2017. "Overall, we are encouraged by the improvements
made in this area and will continue to focus on this area the remainder
of the fiscal year," added Handley.

Expansion - The Company's fiscal 2018 guidance was to build or
acquire 80 to 120 stores, replace 30 existing locations, and complete 75
major remodels. At the end of the first quarter, the Company had built
and opened two new stores, acquired three stores, completed one
replacement, and remodeled 11 stores. In addition, there were 47 new
stores, 27 replacement stores, and 16 major remodel stores under
construction. Finally, the Company had 132 sites under agreement for new
store construction and 18 acquisition stores under agreement to
purchase. "We are pleased with the gains made in accelerating new store
construction, and we will remain disciplined in evaluating acquisition
opportunities," said Handley.

Share Repurchase Program - During the first quarter of fiscal
2018, the Company repurchased 718,369 shares of its common stock under
its open market share repurchase program for approximately $77.9
million, or an average price of $108.41 per share. As of July 31, 2017,
the Company had a total remaining authorized amount for share
repurchases of $172.7 million.

Dividend - At its September meeting, the Board of Directors
declared a quarterly dividend of $0.26 per share. The dividend is
payable November 15, 2017 to shareholders of record on November 1, 2017.

Fiscal 2018 Guidance - Based on the ongoing softening of traffic
experienced in the first quarter, the Company is revising its prepared
food and fountain same-store sales guidance to 4.0% to 6.0% from 5.0% to
7.0%. Also, due to the continued increase in new store construction
activity and the number of acquisition stores under agreement, the
Company is revising its expansion guidance to build or acquire 90 to 120
stores from 80 to 120 stores. There were no other changes to the fiscal
2018 guidance. Below is a summary of the previous and current fiscal
2018 guidance:

       
Same-store Sales Average Margin
Previous     Current Previous     Current
Fuel (Gallons and CPG) 1.0 - 2.0% 1.0 - 2.0% 18.0 - 20.0 18.0 - 20.0
Grocery and Other Merchandise 2.0 - 4.0% 2.0 - 4.0% 31.0 - 32.0% 31.0 - 32.0%
Prepared Food and Fountain 5.0 - 7.0% 4.0 - 6.0% 61.5 - 62.5% 61.5 - 62.5%
Previous Current
Operating Expenses 9.0 - 11.0% 9.0 - 11.0%
Depreciation and Amortization 13.0 - 15.0% 13.0 - 15.0%
Build or Acquire 80 - 120 stores 90 - 120 stores
Replacements 30 stores 30 stores
Major Remodels 75 stores 75 stores
 
 
Casey's General Stores, Inc.
Condensed Consolidated
Statements of Income

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

   
Three Months Ended
July 31,
2017     2016
Total revenue $ 2,093,739 $ 1,970,079
Cost of goods sold (exclusive of depreciation and amortization,
shown separately below)
1,617,042 1,520,284
Operating expenses 321,247 292,128
Depreciation and amortization 52,369 45,855
Interest, net   11,375   10,540
Income before income taxes 91,706 101,272
Federal and state income taxes   34,948   33,880
Net income $ 56,758 $ 67,392
Net income per common share
Basic $ 1.48 $ 1.72
Diluted $ 1.46 $ 1.70
Basic weighted average shares 38,360,104 39,156,462
Plus effect of stock compensation   480,184   474,677
Diluted weighted average shares   38,840,288   39,631,139
 
 

Casey's General Stores, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

       
July 31, 2017 April 30, 2017
Assets
Current assets
Cash and cash equivalents $ 159,101 $ 76,717
Receivables 44,544 43,244
Inventories 225,973 201,644
Prepaid expenses 8,251 9,179
Income tax receivable   1,430   19,901
Total current assets   439,299   350,685
Other assets, net of amortization 23,632 23,453
Goodwill 132,806 132,806
Property and equipment, net of accumulated depreciation of
$1,537,648 at July 31, 2017 and $1,496,472 at April 30, 2016
  2,561,744   2,513,158
Total assets $ 3,157,481 $ 3,020,102
Liabilities and Shareholders' Equity
Current liabilities
Notes payable to bank $ $ 900
Current maturities of long-term debt 15,429 15,421
Accounts payable 281,645 293,903
Accrued expenses   144,789   136,322
Total current liabilities   441,863   446,546
Long-term debt, net of current maturities 1,057,238 907,356
Deferred income taxes 455,688 440,124
Deferred compensation 15,959 15,784
Other long-term liabilities   20,221   19,672
Total liabilities   1,990,969   1,829,482
Total shareholders' equity   1,166,512   1,190,620
Total liabilities and shareholders' equity $ 3,157,481 $ 3,020,102
 

Certain statements in this news release, including any discussion of
management expectations for future periods, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, 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.

 
Revenue and Gross Profit by Category (Amounts in thousands)
 
Three months ended 7/31/2017     Fuel    

Grocery & Other
Merchandise

    Prepared Food

& Fountain

    Other     Total
Revenue $ 1,220,985 $ 597,413 $ 261,840 $ 13,501 $ 2,093,739
Revenue less cost of goods sold (exclusive of depreciation and
amortization)
$ 109,212 $ 190,364 $ 163,645 $ 13,476 $ 476,697
8.9 % 31.9 % 62.5 % 99.8 % 22.8 %
Fuel gallons 565,047
Three months ended 7/31/2016
Revenue $ 1,147,044 $ 566,174 $ 243,655 $ 13,206 $ 1,970,079
Revenue less cost of goods sold (exclusive of depreciation and
amortization)
$ 104,429 $ 179,127 $ 153,052 $ 13,187 $ 449,795
9.1 % 31.6 % 62.8 % 99.9 % 22.8 %
Fuel gallons 535,964
 
   
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

F2018 1.7 % F2018 19.3 ¢
F2017 3.1 3.7 % 2.6 % (0.5 )% 2.1 % F2017 19.5 18.6 ¢ 17.9 ¢ 17.2 ¢ 18.4 ¢
F2016 3.4 3.3 1.6 4.6 3.0 F2016 17.5 24.7 18.1 17.8 19.6
 
Grocery & Other Merchandise Grocery & Other Merchandise
Same-store Sales Margin
Q1 Q2 Q3 Q4

Fiscal
Year

Q1 Q2 Q3 Q4

Fiscal
Year

F2018 3.1 % F2018 31.9 %
F2017 4.7 3.1 % 3.0 % 1.5 % 2.9 % F2017 31.6 32.0 % 31.1 % 31.1 % 31.5 %
F2016 7.7 6.6 7.7 9.7 7.8 F2016 32.6 31.5 31.2 32.1 31.9
 
Prepared Food & Fountain Prepared Food & Fountain
Same-store Sales Margin
Q1 Q2 Q3 Q4

Fiscal
Year

Q1 Q2 Q3 Q4

Fiscal
Year

F2018 3.7 % F2018 62.5 %
F2017 5.1 5.1 % 5.8 % 3.2 % 4.8 % F2017 62.8 62.9 % 61.7 % 61.7 % 62.3 %
F2016 10.3 9.4 6.0 8.2 8.4 F2016 62.5 63.4 62.0 61.9 62.5
 

Corporate information is available at this Web site: http://www.caseys.com.
Earnings will be reported during a conference call on September 6, 2017.
The call will be broadcast live over the Internet at 9:30 a.m. CDT via
the Press and Documents section of our Web site and will be available in
an archived format.

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