RECENT POSTS
Monday, September 16, 2019
Introducing Critical Audit Matters

Wednesday, September 11, 2019
Our Fireside Chat on Goodwill Assets

Friday, September 6, 2019
Pulling Forward Share Buybacks

Saturday, August 31, 2019
A Quick Catch-Up on VMWare

Friday, August 23, 2019
By the Numbers: Restructuring Costs Over Time

Wednesday, August 21, 2019
WeWork Liabilities, Part II

Tuesday, August 20, 2019
WeWork’s Liabilities in Perspective

Wednesday, August 14, 2019
Comparing LinkedIn, Twitter Revenue

Wednesday, August 7, 2019
Leasing’s Effect on Retail Balance Sheets

Thursday, August 1, 2019
Using Calcbench to Find China Exposure

Tuesday, July 30, 2019
Leasing Details: The Comcast Example

Monday, July 29, 2019
Easy Fundamental Equity Analysis in Python

Monday, July 22, 2019
Calcbench Data and Tax Reform Insight

Wednesday, July 17, 2019
Downshifting in the Trucking World

Tuesday, July 16, 2019
New Report: Adoption of New Lease Accounting Standard

Friday, July 5, 2019
More Consequences of Lease Accounting

Monday, July 1, 2019
Another Example of Tax Reform Twisting Bottom Line

Thursday, June 27, 2019
The Latest Share Repurchase Data

Tuesday, June 18, 2019
Popping the Lid on Smuckers’ Goodwill

Tuesday, June 11, 2019
Not Much Fizz in LaCroix Right Now

Archive  |  Search:

The consequences of tax reform in 2017 continue to be seen today, 18 months after Congress cut the corporate tax rate from 35 to 21 percent. Case in point: Casey’s General Stores ($CASY), which filed its latest annual report on June 28.

Casey reported broadly pleasing numbers: revenue growth up by 11.5 percent, cost of goods sold up by 11.7 percent, other operating expenses up by only 8.4 percent. Income before taxes was reported at $263.4 million, a 22.8 percent increase from 2018.

Then we get to the tax line item.

As you can see from Figure 1, below, Casey’s tax payments have bounced up and down over the last three years, and that has had an enormous effect on net income.



Taxes yo-yo’ed from a payment of $92.2 million in 2017; to a benefit of $103.5 million in 2018, the first full year of corporate tax reform; back to another payment of $59.5 million in 2019.

So yes, Casey’s is paying less in taxes from here forward thanks to tax reform — but all of its growth in net income came from that corporate tax cut going into effect in 2018.

Moreover, once we read the details via our Interactive Disclosure viewer, we find that most of that tax benefit ($98.2 million of the $103.5 million total) comes from a one-time revaluation of Casey’s deferred tax assets and liabilities. It’s not as if the firm received a $103.5 million rebate check in the mail, which then went to opening more general stories.

Fundamentally, Casey’s revenue is growing, but quite as fast as cost of goods sold, operating expenses, depreciation and amortization, or interest. Hence pretax income in 2019 ($263.4 million) is down 24.4 percent from where it was in 2016 ($348.7 million).

Only a generous accounting maneuver from tax reform let Casey’s hit last year’s net income out of the park. That maneuver is gone, and now Casey’s is struggling at bat.


FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.