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Casey's (CASY) Q1 Earnings Top Estimates, Revenues Fall Y/Y

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Casey's General Stores, Inc. (CASY - Free Report) reported mixed first-quarter fiscal 2021 results. While the top line fell short of the Zacks Consensus Estimate, the bottom line beat the same. Total revenues continued to decline year over year but earnings per share increased. Notably, improved sales volume coupled with strong fuel margin and better expense management contributed to bottom-line growth.

A Closer Look at Q1 Results

Casey's reported quarterly earnings of $3.24 per share that beat the Zacks Consensus Estimate of $2.00 and improved significantly from $2.31 in the year-ago period.

Total revenues came in at $2,105 million, which not only declined 19.9% year over year but also missed the Zacks Consensus Estimate of $2,134 million. We note that the company had surpassed revenue estimates in the preceding quarter. Revenue declines across Fuel and Prepared Food & Fountain categories, was partly offset by increase in Grocery & Other Merchandise category.

In spite of the decline in the top line, gross profit increased 10.2% year over year to $623.5 million due to fall in cost of goods sold. Further, gross margin expanded to 29.6% from 21.5% in the year-ago period. The company witnessed a decline of 28.1% in cost of goods sold during the reported quarter.

We note that Casey's registered an increase of 1.6% in operating expenses on account of operating 53 more stores compared with the same period last year and incremental expenses associated with the ongoing pandemic. This was partly offset by reduction in hours at the stores and lower credit card fees.

Shares of this Zacks Rank #2 (Buy) company have gained 11.4% in the past three months compared with the industry’s rally of 11.7%.

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. price-consensus-eps-surprise-chart | Caseys General Stores, Inc. Quote

Performance by Categories

We note that Fuel sales decreased 33.3% to $1,086 million on account of decline in average retail price per gallon and the number of gallons sold. We note that average retail price per gallon decreased 24.8%, while total gallons sold fell 11.2% to 549.5 million. Fuel gallons same-store sales fell 14.6% compared with decline of 2% in the year-ago quarter owing to the ongoing pandemic and lower guest traffic. Impressively, gross profit increased 39.1% to $210 million driven by higher fuel margin. Notably, fuel margin surged to 38.2 cents per gallon from 24.4 cents per gallon in the prior-year period driven in part by the company's centralized retail pricing strategy and procurement improvements.

Grocery & Other Merchandise sales rose 6.4% to $731.9 million. Same-store sales rose 3.6% compared with 3.2% in the year-ago quarter, primarily due to robust sales of alcohol and packaged beverages. Notably, Grocery & Other Merchandise margin expanded 90 basis points to 32.2%. Again, gross profit jumped 9.4% to $235.6 million during the quarter.

Prepared Food & Fountain sales declined 8.5% to $270.8 million. Same-store sales decreased 9.8% against 1.6% growth witnessed in the year-ago quarter. The metric declined owing to lower store traffic and restrictions limiting self-serve prepared food items such as bakery and dispensed beverages. Further, Prepared Food & Fountain margin shrunk 250 basis points to 59.7%. Higher commodity costs and increased promotional activity adversely impacted the margin. Gross profit fell 12.2% year over year to $161.6 million.

Store Update

During the quarter, the company constructed nine new stores and closed two. As of Jul 31, the company operated 2,214 stores in 16 Midwest states. The company had four acquisition stores under agreement to purchase and a new store pipeline of 86 sites, including 20 under construction, as of Jul 31, 2020.

Other Financial Aspects

Casey's ended the reported quarter with cash and cash equivalents of $246.5 million, long-term debt (net of current maturities) of $1,281.7 million and shareholders’ equity of $1,751.2 million. During the quarter, the company did not make any share repurchases and still has $300 million under authorization.

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