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How CASY Expanded Its Business and Maintained Its Balance Sheet

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Apr. 28 2016, Updated 12:01 a.m. ET

Capital expenditure overview and outlook

Casey’s General Stores (CASY) has followed a disciplined growth approach, expanding both organically and inorganically while keeping its balance sheet in check.

Capital expenditure represents the single largest use of Casey’s funds. The company continues reinvesting in its stores to better manage competition and increase its operating efficiencies. During fiscal 2015, its capital expenditure stood at $401 million, which was primarily spent on construction, acquisitions, and store remodeling.

 

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The company has a capital expenditure budget of $436 million–$528 million for fiscal 2016, the majority of which will be spent on acquisitions and new store constructions ($208 million–$300 million). The company funds its capital expenditure needs through a combination of cash generated from operations, debt, and equity raised.

Casey’s capital expenditure-to-sales ratio for fiscal 2015 stood at 4.6%. This was higher than CST Brands’ 2.2% and Murphy’s 0.8% in their last reported fiscal years.

Debt versus equity for Casey’s and its peers

Casey’s total debt stood at $845 million at the end of 3Q16. The company only had $53 million in cash on its balance sheet, placing its net debt at $792 million.

The company has a stronger balance sheet compared to most of its peers, with one of the lowest debt-to-equity ratios in the industry. Its debt-to-equity ratio of 0.84x is lower than CST Brands’ (CST) 0.94x, Sunoco’s (SUN) ~1x, and Kroger’s (KR) ~1.8x.

Casey’s General Stores is included in the portfolio holdings of the PowerShares DWA Consumer Staples Momentum ETF (PSL) and the SPDR S&P Retail ETF (XRT). PSL and XRT have holdings of 2.9% and 1.1%, respectively, in CASY.

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