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ANKENY, Iowa -- Casey's General Stores Inc. is in its final "due diligence stage" and could announce the location of its second distribution center in the near future, Senior Vice President and Chief Financial Officer Bill Walljasper said today during the company's 2014 fiscal first-quarter earnings call.
"We expect to have much more information about that on our next earnings call [in December]," he said. The CFO would only say that the distribution center will be located in the Southeastern part of the company's operating region.
The opening of a second distribution is significant as Casey's expects to expand its convenience store business into Tennessee, Kentucky and even further south via both acquisitions and new store builds, noted Walljasper.
Reverting to the present, he added that Casey's is optimistic about its current new-build and acquisition pipeline. The c-store retailer opened four new stores and acquired three in its latest quarter ended July 31. The company's goal is to build or acquire 40 to 45 new stores by the end of the 2014 fiscal year. Arkansas is one area that has done well for Casey's and will continue to be an emphasis moving forward, Walljasper stated.
"Our pipeline of new store constructions and potential acquisitions is as full as it has been in recent memory," commented Casey's President and CEO Robert J. Myers. "Our balance sheet remains very strong and we are well positioned to take advantage of opportunities."
Backing up Myers' comment, Walljasper reported during the call that Casey's had $190.9 million in available cash as of July 31.
As for its latest quarterly results, the Ankeny, Iowa-based retailer saw its earnings rise significantly. Casey's achieved $55.7 million in net profit, vs. $39 million for its 2013 fiscal first quarter. Walljasper cited the sale of renewable identification numbers (RINs) and Casey’s Fuel Saver program — a joint venture with Hy-Vee Inc. that offers gasoline discounts to customers — as the two top earnings drivers.
Thanks in part to the Fuel Saver program, Casey's achieved a record average fuel margin of 22.1 cents. Also, same-store gallons sold increased 3.2 percent year over year, approximately twice the increase the retailer expected.
The Fuel Saver program has been implemented in approximately 1,200 of Casey's 1,749 stores. Hence, there is an opportunity to further expand the program with Hy-Vee or another partner in the future, according to Walljasper.
In-store merchandise was another point of strength for Casey's in its most recent quarter. Grocery and merchandise enjoyed a 6.1-percent increase year over year, with an average margin of 32.7 percent. Prepared food and fountain was also especially strong, as it saw an 11.9-percent improvement with an average margin of 61.8 percent.
Continuing an ongoing company trend, Casey's added 57 more stores to its pizza delivery program in the first quarter. In addition, the company successfully opened one Pizza Express location in Pleasant Hill, Iowa, on Aug. 1. Located in a strip mall, Pizza Express offers carryout and delivery service by the slice or by the pie. Fountain drinks, breadsticks, pasta, chicken wings and a frozen yogurt bar are also available, but it does not have a full-fledged c-store offering.
"It's a test right now," concluded Walljasper. "We are encouraged by [its] top-line growth thus far."