Casey’s General Stores Inc. (CASY) posted fiscal second quarter results after the closing bell on Monday.  The convenience stores operator recorded a net income of $33.6 million, a growth of nearly 23% over $27.3 million posted in the year-ago period primarily due to strong gross margins. Earnings per share came in at 66 cents, beating the Zacks Consensus Estimate by 10%, or 6 cents.
 
The company reported a 16.9% decline in total revenues to $1.15 billion during the quarter, compared to $1.39 billion in the year-ago period. The decrease was mainly caused by a 24.5% reduction in Gasoline sales to $779.1 million, partially offset by a 4.1% and 7.9% growth in Grocery and General merchandise, and Prepared Food and Fountain sales to $276.1 million $94.9 million respectively.
 
Casey’s gross profit grew by 8.0% year over year to $206.4 million, while gross margin jumped 410 basis points (bps) to 17.9%. The growth was primarily driven by higher margins in gasoline and cigarettes coupled with lower cheese and other product costs. Operating expenses increased by 2.8% to $131.0 million due to higher wages, utilities and insurance. However, growth in gross profit more than offset the increase in operating expenses. Consequently, Casey’s posted a strong 22.9% growth in operating income (gross profit less operating expenses and depreciation and amortization) to $56.8 million from $46.2 million in the year-ago period.
 
At the end of the quarter, Casey’s had cash and cash equivalents of $177.9 million, compared to $137.8 million in the year-ago period. During the first half of the current fiscal the company utilized $71.0 million towards capital expenditure, $14.8 million towards repayment of debt and $8.6 million towards dividend payments.
 
Moving forward, Casey’s plans to ramp up its store count by 4% during fiscal 2010 and expects to spend approximately $165 million in the entire fiscal towards construction, acquisition and remodeling of stores. Meanwhile, the Zacks Consensus Estimate, derived from 5 covering analysts, on earnings for the fiscal year ending April 2010 is currently pegged at $2.26 per share, which has moved up by 5 cents over the past month. However, the most accurate estimate is slightly bearish at $2.13 per share.
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