- "Casey's Board of Directors and management team welcome and appreciate input from all shareholders. To that end, we met with representatives from JCP this past summer. During that discussion they did not raise their recommendation that Casey's explore strategic alternatives, and there has been no substantive engagement with them since that time. However, the Board will review the content of their letter thoroughly." Casey's has a strong track record of delivering value for shareholders. The Company's 5-year total shareholder returns (TSR) of 121% exceed the TSRs of the S&P 500 index (108%) and the S&P Retail index (46%) over the same period. Mr. Handley continued, "The Company is focused on generating increased long-term value for shareholders through new initiatives to accelerate same-store growth and returning cash to shareholders through share repurchases and a steadily increasing dividend. With the combination of the Company's growing acquisition pipeline, new store construction activity, new initiatives aimed at enhancing operations -- such as digital engagement and price optimization projects -- Casey's expects to deliver substantial value for its shareholders."
Closing Market Summary: Records All AroundWall Street advanced to new record highs for the second day in a row on Wednesday, solidifying a solid start to the new year.
The Nasdaq climbed 0.8% to 7065.53, the S&P 500 jumped 0.6% to 2713.06, the Dow Jones Industrial Average advanced 0.4% to 24922.68, and the Russell 2000 hopped 0.2% to 1552.55. All four indices finished at new all-time highs, with the tech-heavy Nasdaq extending its 2018 gain to 2.4%. The S&P 500 is up 1.5% after the first two sessions of the new year.
Equities opened Wednesday's session just a tick above Tuesday's closing levels, but buyers soon took control, pushing the major stock indices higher through the late morning. The bulls hit pause ahead of the afternoon release of the minutes from the December FOMC meeting, which showed that most members backed a continued path of gradual rate hikes.
Some FOMC members even saw the possibility for more aggressive monetary policy depending on economic growth resulting from the GOP's tax overhaul--which President Trump signed into law two weeks ago. Many Fed officials believe that the tax cuts will boost consumer and capital spending, but there's uncertainty surrounding the magnitude of the growth.
The equity market resumed its upward trend following the minutes, finishing the day at its session high, while the Treasury market gave back some of its opening gains. The yield on the benchmark 10-yr Treasury note finished lower by two basis points at 2.45%, while the 2-yr yield climbed one basis point to 1.93%. Yields move inversely to prices.
Energy shares led the rally on Wall Street as West Texas Intermediate crude futures climbed 2.1% to $61.63 per barrel--which marks their best close since December 2014. Anti-government protests in oil-rich Iran helped fuel the commodity's advance, even though the demonstrations aren't expected to affect production. The S&P 500's energy sector added 1.5%.
The heavily-weighted technology and health care sectors were the next-best performing groups, adding 1.1% and 1.0%, respectively, while the other advancing sectors added between 0.1% and 0.7%. Within the tech space, chipmakers had another solid day overall, extending the PHLX Semiconductor Index's week-to-date gain to 4.5%, but Intel (INTC 45.26, -1.59) did not.
INTC shares lost 3.4% in reaction to reports that a design flaw in Intel's processor chips has forced a significant redesign of kernels for the Windows and Linux operating systems. Intel issued a statement refuting the claims in the late afternoon, which helped INTC shares pare some of their losses before the closing bell.
Only three of eleven sectors finished the midweek session in the red--consumer staples (-0.1%), utilities (-0.8%), and telecom services (-2.2%)--but their impact was modest as they comprise just a little more than 10.0% of the broader market combined.
Elsewhere, the Euro Stoxx 50 (+0.6%) ended a six-session losing streak and the major indices in the Asia-Pacific region also finished in the green. China's Shanghai Composite (+0.6%) paced the advance in Asia while Japan's Nikkei remained closed for a holiday.
Reviewing Wednesday's economic data, which included the ISM Manufacturing Index for December, Construction Spending for November, and the weekly MBA Mortgage Applications Index:
- The ISM Index for December rose to 59.7 from an unrevised reading of 58.2 in November, while the consensus expected a reading of 58.0.
- The key takeaway from the report is that growth in December was fueled by increases in eight out of ten index categories with New Order growth (+5.4 to 69.4) leading the way. The December increase leaves the index not far from its 2017 high of 60.8 that was recorded in the September reading.
- The Construction Spending report for November increased 0.8%, while the consensus expected an increase of 0.7%. The prior month's increase was lowered to 0.9% from 1.4%.
- The key takeaway from the report--and the downward revision to the October figure--is that construction spending is not sending signals pointing to notable acceleration in overall GDP growth.
- The weekly MBA Mortgage Applications Index decreased 2.8% to follow last week's 4.9% decline.
On Thursday, investors will receive two economic reports--ADP Employment Change for December (consensus +190K) and weekly Initial Claims (consensus 239K). The two reports will be released at 8:15 AM ET and 8:30 AM ET, respectively.
- Nasdaq Composite: +2.4% YTD
- S&P 500: +1.5% YTD
- Russell 2000: +1.1% YTD
- Dow Jones Industrial Average: +0.8% YTD
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- Reports Q3 (Nov) net of breakeven, may not compare to the Capital IQ Consensus of ($0.02); revenues from continuing operations (ex divested stores) fell 5.6% year/year to $5.35 bln, not comparable to the $7.59 bln Capital IQ Consensus.
- Pharmacy Segment revenues were $4.0 billion and decreased 3.0% compared to the prior year period primarily as a result of a decrease in same store sales and reimbursement rates. Revenues in the company's Pharmacy Services Segment were $1.4 billion and decreased 12.2% compared to the prior year period, due to an election to participate in fewer Medicare Part D regions and a decline in commercial business. Same store sales from continuing operations for the quarter decreased 2.5% from the prior year, consisting of a 3.5% decrease in pharmacy sales and a 0.5% decrease in front-end sales. Pharmacy sales included an approximate 198 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 2.4% from the prior year period due in part to exclusion from certain pharmacy networks that Rite Aid participated in the prior year. Prescription sales from continuing operations accounted for 66.5% of total drugstore sales.
- "Our pro-forma Adjusted EBITDA from continuing operations for the third quarter of $153 million, which includes $24 million in fees that would have been received if all of the divested stores were being managed under the TSA Agreement as of the beginning of the period, was in line with our expectations," said Rite Aid Chairman and CEO John Standley.
- "The third quarter was a busy time for our team in preparing for and beginning the transfer of stores and related assets to Walgreens Boots Alliance... To date, we have transferred 357 stores and have received ~$715 million in proceeds, which we have used to pay down debt. Looking forward, in addition to completing the transfer process, we will continue to focus on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients."
- As previously announced on November 27, 2017, the company completed the pilot closing and first subsequent closing under the amended and restated asset purchase agreement with Walgreens Boots Alliance (WBA), resulting in the transfer of 97 Rite Aid stores and related assets to WBA during the third quarter. Under the amended and restated agreement, WBA will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375 billion. Rite Aid and WBA expect to continue to transfer ownership of the stores in phases over the coming months.
- "This was once again our all-time best quarter for combined Model S and X deliveries, representing a 27% increase over Q4 2016, and a 9% increase over Q3 2017, our previous best quarter... In total, we exceeded our previously announced guidance by delivering 101,312 Model S and X vehicles in 2017.. In addition to Q4 deliveries, about 2,520 Model S and X vehicles and 860 Model 3 vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q1 2018. Q4 production totaled 24,565 vehicles, of which 2,425 were Model 3. As we previously indicated, we slightly reduced Model S and X production in Q4 because of the reallocation of some of the manufacturing workforce towards Model 3 production, which also caused inventory to decline."
- "During Q4, we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter. In the last seven working days of the quarter, we made 793 Model 3's, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week. As a result of the significant growth in our production rate, we made as many Model 3's since December 9th as we did in the more than four months of Model 3 production up to that point. This is why we were not able to deliver many of these cars during the holiday season, just before the quarter ended. Model 3 deliveries to non-employee customers are now accelerating rapidly, and we're confident our customers will love them. As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2. We're very grateful to everyone at Tesla who has poured their heart and soul into helping with the Model 3 ramp and creating the progress we are seeing.... Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5%. Tesla vehicle deliveries represent only one measure of the company's financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles."