Casey's General Stores Inc. (CASY) reported Tuesday a decline in profit for the first quarter, on legal expenses related to evaluation of offer from Alimentation Couche-Tard Inc. (ATD_A.TO,ATD_B.TO) as well as lower gross margin. Quarterly adjusted earnings per share declined, yet came in line with market projections. Further, Casey's signed commitments to buy an additional 52 stores, and lifted its quarterly dividend by 35%.
Meanwhile, the Ankeny, Iowa-based convenience store operator urged its shareholders not to tender into its Canadian rival Couche-Tard's revised tender offer to acquire Casey's for $38.50 per share as it substantially undervalues the company. Casey's added that its in talks with a strategic third party after receiving a $40 per share cash offer.
Separately, Couche-Tard urged Casey's shareholders to vote to elect its eight new, independent nominees to the Casey's Board at the annual meeting to be held on September 23.
For the first quarter, Casey's net earnings fell to $37.29 million or $0.73 per share from last year's $44.19 million or $0.87 per share. The latest quarter results included about $6.2 million in legal and advisory fees pertaining to the evaluation of the unsolicited offer and related actions by Couche-Tard. Meanwhile, prior year results reflected a one-time tax benefit of $2.2 million.
Excluding fees related to unsolicited Couche-Tard offer, earnings for the 2011 quarter would have been about $0.81 per share. On average, seven analysts polled by Thomson Reuters expected earnings of $0.81 per share for the quarter. Analysts' estimate typically excludes one-time items.
Total revenue grew to $1.36 billion from $1.19 billion in the comparable period, and were in line with five analysts' consensus estimates of $1.36 billion.
Segment-wise, Gasoline sales climbed to $936.65 million from prior year's $790.63 million. The quarter's same-store gallons sold were up 1.5%. Grocery & Other Merchandise same-store sales rose 2%, and total sales grew 6.7% year-over-year to $317.2 million. In the Prepared Food & Fountain division, same-store sales increased 2.4%, and total sales increased 7.6% to $102.4 million.
In the quarter, total gross profit rose to $233.97 million from prior year's $220.13 million, while gross margin declined to 17.2% from 18.5% a year ago. The company's operating expenses increased 15.1% to $152.4 million, due to rise in credit card fees and the expenses associated with operating more stores.
President and Chief Executive Robert Myers commented, "The solid first quarter results demonstrate that Casey's continues to execute well on our strategic plan."
Further, Casey's announced that it has signed commitments to buy an additional 52 stores that it anticipates purchasing by the end of the calendar year.
Myers said, "Our substantial progress to date, coupled with our robust acquisition pipeline, has us ahead of schedule in achieving our fiscal 2011 goal of increasing the total number of Casey's stores by 4-6%."
The company also noted that its Board, at a September meeting, declared a quarterly dividend of $0.135 per share, a 35% increase, following successful recapitalization. The dividend is payable on November 15 to shareholders of record on November 1.
Looking ahead, the company said its expects fiscal 2011 Grocery & Other Merchandise same-store sales growth of 6%, and Prepared Food & Fountain same-store sales growth of 8%.
Separately, Casey's said its Board unanimously recommended against Couche-Tard's revised tender offer to acquire Casey's for $38.50 per share as it substantially undervalues the company. Casey's said the offer is not in the best interests of Casey's, its shareholders and other constituencies.
Meanwhile, the company said it received a preliminary $40 per share cash offer from a strategic third party, but unanimously determined that it substantially undervalues Casey's. According to the company, its Board firmly believes that Casey's value substantially exceeds $40 per share.
Casey's has authorized talks with the third party to explore whether a deal can be reached that reflects its true value and for its best interests. However, there can be no assurances of a deal.
CASY is currently trading at $41.89, up $2.99 or 7.67%, on a volume of 75 thousand shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.