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    CASY
    Earnings call· Jul 2025(Q1 FY26)

    CASEYS GENERAL STORES INC CASY

    Sep 9, 2025 Source

    Executive summary

    Casey's Q1 FY26 — Strong Start with Market Share Gains and Margin Expansion

    Casey's delivered a strong Q1 FY26, driven by robust inside sales, positive traffic, and market share gains in fuel. The company is effectively balancing volume and margin across categories, with strategic initiatives like Fuel 3.0 and CEFCO integration progressing as planned, despite some initial margin headwinds from acquisitions. Management expects to update annual guidance on the Q2 earnings call.

    Highlights

    5

    • Diluted EPS increased 19% to $5.77 per share.

    • Net income and EBITDA both rose 20% to $215 million and $414 million, respectively.

    • Inside same-store sales were up 4.3%, with prepared food and dispensed beverage leading at 5.6% growth.

    • Fuel same-store gallons increased 1.7% with a margin of $0.41 per gallon, outpacing a regional decline.

    • Inside gross profit margin expanded 20 basis points to 41.9%.

    Concerns

    3

    • Prepared food and dispensed beverage margin was down 30 basis points year-over-year, primarily due to the lower margin from recently acquired CEFCO stores.

    • Net interest expense increased by $12.8 million to $26.9 million, mainly due to financing associated with the Fikes transaction.

    • CEFCO stores are currently under pressure and do not yet offer Casey's full food proposition, impacting their performance.

    Guidance & targets

    2
    CategoryTargetConfidence
    Operating expense growth
    mid-teens
    medium materiality
    High
    Share repurchase activity
    continue to do so
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Inside Sales
    Total inside sales increased, driven by higher traffic and effective promotional activity. Average margin expanded.
    Same-store sales: 4.3%Same-store sales (2-year stack): 6.7%
    		$1.68B14.2%—41.9%
    Prepared Food and Dispensed Beverage
    Led inside sales growth, with strong performance from whole pies and bakery. Margin was impacted by lower margins from CEFCO stores, partially offset by retail price adjustments and cost management.
    Same-store sales: 5.6%Same-store sales (2-year stack): 10.2%Margin change: down 30 bps YoY
    		$458M13.2%—58%
    Grocery and General Merchandise
    Sales increased with margin expansion primarily due to a favorable mix shift towards higher-margin items like energy drinks and nicotine alternatives.
    Same-store sales: 3.8%Same-store sales (2-year stack): 5.4%Margin change: up 50 bps YoY
    		$1.23B14.6%—35.9%
    Fuel
    Strong performance with market share gains, outpacing the Mid-Continent region's decline. Margin was inclusive of a $0.015 per gallon drag from CEFCO stores.
    Gallons sold increase: 18%Same-store gallons sold: 1.7%Average retail price: $3.00 per gallonAverage retail price (prior year): $3.31 per gallonMargin change: up $0.03 per gallon YoY
    		up $178M——$0.41 per gallon

    Operational metrics

    29
    Diluted EPS
    $5.77up 19% YoY
    Q1 FY26

    Diluted EPS for the first quarter.

    Net income
    $215.4Mup 19.5% YoY
    Q1 FY26

    Net income for the first quarter.

    EBITDA
    $414.3Mup 19.8% YoY
    Q1 FY26

    EBITDA for the first quarter.

    Total revenue
    $4.6Bup $469M or 11.5% YoY
    Q1 FY26

    Total revenue for the first quarter.

    Gross profit
    $1.11Bup $157M or 16.5% YoY
    Q1 FY26

    Total gross profit for the first quarter.

    Total operating expenses
    $88.7Mup 14.6% YoY
    Q1 FY26

    Total operating expenses for the first quarter, with a portion attributed to unit growth.

    Same-store operating expense (excluding credit card fees)
    3%up YoY
    Q1 FY26

    Increase in same-store operating expenses, excluding credit card fees.

    Same-store employee expense
    1.5%of total operating expense increase
    Q1 FY26

    Contribution of same-store employee expense to the total operating expense increase, with modest wage increases offset by reduced labor hours.

    Net interest expense
    $26.9Mup $12.8M YoY
    Q1 FY26

    Net interest expense for the first quarter, primarily due to Fikes transaction financing.

    Depreciation
    $109Mup $15M YoY
    Q1 FY26

    Depreciation for the first quarter, primarily due to operating more stores.

    Effective tax rate
    22.7%vs 24.1% YoY
    Q1 FY26

    Effective tax rate for the first quarter, decreased due to increased tax benefits on share-based awards.

    Cash taxes reduction (One Big Beautiful Bill Act)
    $90M
    FY26

    Expected reduction in cash taxes related to capital spending over the fiscal year, not impacting EPS tax rate.

    Available liquidity
    $1.4B
    as of July 31

    Total available liquidity at the end of the first quarter.

    Debt-to-EBITDA ratio
    1.8x
    as of July 31

    Debt-to-EBITDA ratio calculated under credit facility covenants.

    Quarterly dividend
    $0.57maintained
    Q1 FY26

    The Board voted to maintain the quarterly dividend.

    Share repurchases executed
    $31M
    Q1 FY26

    Amount of shares repurchased during the first quarter.

    Remaining share repurchase authorization
    $264M
    as of Q1 FY26

    Remaining amount on the existing share repurchase authorization.

    Fuel 3.0 procurement
    8.8%
    Q1 FY26

    Percentage of total fuel procured through the Fuel 3.0 initiative for the combined business, with the majority from Fikes acquisition.

    Fuel 3.0 procurement
    3%
    Q1 FY26

    Percentage of fuel procured through the Fuel 3.0 initiative for the base business.

    Cheese hedging
    70%
    Remainder of FY26

    Percentage of forward cheese requirements locked for the remainder of the fiscal year at comparable or slightly favorable rates.

    Inside sales traffic increase
    1.5%
    Q1 FY26

    Increase in traffic contributing to inside sales growth.

    Inside sales price contribution
    3%
    Q1 FY26

    Contribution from pricing to overall inside sales growth, largely from tobacco.

    Lower income cohort shopping behavior
    160 bpslower than higher income cohorts
    Q1 FY26

    Lower income group ($50,000 or less) shopping activity compared to higher income groups.

    CEFCO prepared food margin
    slightly greater than halfvs Casey's store margin
    Q1 FY26

    The margin rate of CEFCO's prepared foods business compared to a typical Casey's store.

    Nonalcoholic beverages growth
    >8%
    Q1 FY26

    Strongest growth area within grocery and general merchandise, driven by energy drinks.

    Nonalcoholic beverages margin improvement
    120 bps
    Q1 FY26

    Improvement in margin rate for nonalcoholic beverages.

    Nonalcoholic beverages share growth
    120 bps
    Q1 FY26

    Increase in share for nonalcoholic beverages within the category.

    Tobacco/nicotine mix
    down 130 bpsYoY
    Q1 FY26

    Shift in mix within the tobacco/nicotine category, with lower combustible cigarette share but higher margin from alternatives.

    Same-store labor hours
    1%decrease YoY
    Q1 FY26

    Overall decrease in same-store labor hours due to focus on simplifying operations, resulting in reduced training and overtime.

    Industry KPIs

    5
    MetricValueDetails
    Gross margin drivers41.9%%
    Fuel gas station economics$0.41per gallon
    Warehouse store club count221stores
    Comparable same store sales4.3%%
    Category level comps and inflation deflation$2.11per pound

    Product announcements

    2
    ProductTypeDetails
    Barbecue Brisket pizzaexpansion
    Wingsroadmap

    Risks & headwinds

    3
    CEFCO integration drag on prepared food marginQ1 FY26

    approximately 110 basis points headwind

    Mitigation: Modest retail price adjustments and strong cost of goods management partially offset the impact; future remodels and kitchen conversions expected to improve performance.

    CEFCO stores underperformance in TexasCurrent

    a bit under more pressure than our base business

    Mitigation: Planned remodels and conversion to Casey's food proposition expected to change the trajectory of these businesses.

    Lower income consumer pressure on cigarette salesQ1 FY26

    category most pressured

    Mitigation: Casey's cigarette mix is lower than most of the industry, providing some insulation.

    What to watch in Q2 FY26

    5

    CEFCO store conversions and prepared food margin impact

    Next quarter and beyond (significant synergy capture >1 year)
    Current110 bps drag on prepared food margin
    TargetReduced drag and improved margins as kitchens are converted

    Why it matters

    Successful integration of CEFCO stores, particularly the food proposition, is key to realizing significant synergies and improving overall profitability.

    We won't see the biggest benefit until we convert the kitchens and start selling the full assortment. So at the moment, their prepared foods business runs at a margin rate just slightly greater than half of the margin rate of a Casey's store. So there's going to be that drag until we get those stores converted and fully up to speed.

    Q&A highlights

    7

    What is the benefit from lower cheese costs, and how much of the year's needs are booked?

    Management stated that Q1 cheese costs were very close to the prior year. For the remainder of the fiscal year, 70% of cheese requirements are locked at comparable or slightly favorable rates year-over-year, providing certainty.

    “As we sit here today, we are about 70%, 7-0 percent locked on our forward cheese requirements for the remainder of this fiscal year.”

    asked by Pooran Sharma · answered by Stephen Bramlage

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Plan Execution and Community Impact

    Casey's is in the third year of its 3-year strategic plan, demonstrating strong execution with an outstanding Q1 FY26 performance. The company's summer plan, merchandising efforts, and operational initiatives contributed to positive traffic and strong results across the business. Additionally, Casey's awarded $900,000 in Cash for Classrooms grants last year and raised over $1 million in August for education, underscoring its commitment to community support.

    02

    CEFCO Integration Progress and Challenges

    The integration of CEFCO stores is largely on track, with initial synergies realized from fuel operations and G&A. However, the most significant synergies, particularly from prepared food offerings, require extensive store remodels and kitchen installations, which are expected to take over a year to complete. Currently, CEFCO stores operate at significantly lower prepared food margins and face more pressure in the Texas region due to the absence of Casey's full food proposition.

    03

    Fuel Business Strength and Fuel 3.0

    Casey's fuel business continues to outperform the Mid-Continent region, with same-store gallons up 1.7% against a regional decline of approximately 3%. This success is attributed to the strong prepared food offer driving traffic, a positive value perception among guests, and a consistent competitive pricing strategy. The Fuel 3.0 initiative is progressing, now accounting for 8.8% of total fuel procured for the combined business, with 3% from the base business.

    04

    Consumer Behavior Across Income Cohorts

    Analysis of Casey's Rewards members indicates relatively strong performance across all income cohorts. While the lower-income group (under $50,000) shops and buys at a healthy clip, their purchasing is about 160 basis points lower than higher-income cohorts. Prepared foods, offering a strong value proposition, resonate well across all groups, whereas cigarette sales are more impacted by lower-income consumers.

    05

    M&A Landscape and Future Growth

    The M&A environment for small deals remains active, with strong seller interest. For larger deals, Casey's is engaged in conversations but has no active transactions at the moment. The company's fundamental growth algorithm targets 8% to 10% EBITDA growth, with half from base business initiatives and half from store growth, typically 4% to 5% unit growth annually, split between new builds and small-deal M&A.

    06

    Grocery & General Merchandise Margin Expansion

    The grocery and general merchandise category saw a 50 basis point margin increase, driven by a favorable mix shift. Nonalcoholic beverages, particularly energy drinks, were the strongest growth area, contributing over 8% growth. The mix shift towards higher-margin nicotine alternatives and the growing share of nonalcoholic beverages (up 120 bps in share and margin rate) significantly contributed to the overall margin expansion.

    AI-generated summary of the company’s earnings call. Not investment advice.