CASEYS GENERAL STORES INC Q3 FY2025 earnings call

• Thanked the Casey's team for the quarter and highlighted the Feeding America campaign with Celsius. - Diluted EPS finished at $2.33 per share and net income was $87 million, both flat with prior year. EBITDA was $242 million, up 11% from prior year. Inside sales up over 15%, fuel gallons sold up over 20%, store count growth up 10%. - Inside same-store sales up 3.7% (8% two-year stack) with 40.9% margin. Prepared food and dispensed beverage led growth at 4.7% (12.6% two-year stack) with 57.8% margin. Hot sandwiches up over 50%, bakery up nearly 10%. - Fuel outperformed geographic market, same-store gallons up 1.8%, margin $0.364 per gallon. - Integration of CEFCO stores impacted margin due to lower-margin profile and coffee promotion.

Total revenue for the quarter was $3.9 billion, an increase of $574 million or 17.3% from the prior year. Inside sales were $1.4 billion, up $185 million or 15.3% from the prior year. Prepared food and dispensed beverage sales rose by $48 million to $397 million (13.7% increase), and grocery and general merchandise sales increased by $138 million to $1 billion (15.9% increase). Retail fuel sales were up $315 million, driven by a 20.4% increase in fuel gallons sold. Same-store inside sales were up 3.7% for the quarter (8% on a two-year stack basis) with an average margin of 40.9%. Same-store prepared food and dispensed beverage sales were up 4.7% (12.6% on a two-year stack basis) with an average margin of 57.8%. Same-store grocery and general merchandise sales were up 3.3% (6.2% on a two-year stack basis) with an average margin of 34.2%. Same-store fuel gallons sold were up 1.8% with a fuel margin of $0.364 per gallon.

• Expect EBITDA to increase approximately 11%. - Purchase of property and equipment expected to be approximately $500 million. - Fourth quarter impacted by Fikes transaction on margins and expenses, but not same-store sales. - February 2024 leap day impact not repeating, February 2025 weather and leap day lapping affected fourth quarter same-store sales, but company expects to finish year at bottom of inside same-store sales range. Same-store gallons still expected near middle of range for fiscal year.

• Integration of recent acquisitions. - Ability to execute strategic plan and realize benefits. - Impact and duration of conflict in Ukraine and related governmental actions.

Q: Jacob Aiken-Phillips of Melius Research asks about strategic positioning during volatile environment.

A: Darren Rebelez states the company has enhanced capabilities in procurement, data analytics, etc., and feels better equipped to handle volatility. Steve Bramlage adds about the resilient core business model.

Q: Anthony Bonadio of Wells Fargo asks about Fikes early performance and integration.

A: Darren Rebelez says early performance is positive despite winter weather issues, integration going well. Steve Bramlage mentions synergy expectations of $45 million over 3-4 years, with food synergies later.

Q: Anthony Bonadio asks about fuel gallon outperformance and balance between gallon growth and margin.

A: Darren Rebelez says factors include ramp of acquisition stores and traction in diesel.

Q: Bonnie Herzog of Goldman Sachs asks about recession impact and promotions.

A: Darren Rebelez says Casey's sells non-discretionary items at low price points, and promotions are targeted.

Q: Mike Montani of Evercore ISI asks about consumer state and value gap.

A: Darren Rebelez says lower-income consumers still purchasing but at softer rates, and Casey's has value proposition with pizza being competitive.

Q: Bobby Griffin of Raymond James asks about February impact and March bounce.

A: Darren Rebelez says February was weather-impacted, and March starts to bounce back as weather normalizes.

Q: Krisztina Katai of Deutsche Bank asks about innovation driving prepared foods and wings rollout.

A: Darren Rebelez says innovation drives growth, with hot sandwiches and specialty pizza as examples, and wings test in Des Moines is early.

Q: Kelly Bania of BMO Capital Markets asks about Fikes EBITDA contribution and fuel margin.

A: Steve Bramlage says Fikes was EBITDA dilutive in quarter due to integration costs, and mothership Casey's fuel margin is higher.

Q: Chuck Cerankosky of Northcoast Research asks about wings rollout cities.

A: Darren Rebelez says wings test in Des Moines area is ongoing with no immediate additional cities.

Q: John Royall of JPMorgan asks about growth in Texas and NTI vs acquisitions.

A: Darren Rebelez says Texas and other states have growth opportunities, and growth target is half NTI and half acquisition.

Q: Chuck Grom of Gordon Haskett asks about Fikes margin drag and prepared food drag wrapping.

A: Steve Bramlage says Fikes CPG margin drag is ~$0.02, and prepared food drag will be addressed over time with synergies.

Q: Mike Montani of Evercore ISI asks about private label tiering and acquisitions.

A: Darren Rebelez says private label tiering is in progress, and M&A environment is favorable with good deal flow.