Casey's General Stores, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Unit Growth: Fiscal 2025 was the largest store growth year in company history with 35 new builds and 235 units acquired, including the Fikes Wholesale acquisition.
• Financial Results: Fiscal 2025 was a record year with diluted EPS of $14.64 (+9%), net income $547M, and EBITDA $1.2B (+13%). Inside margin expanded to 41.5% (+50bps). Fuel gross profit was up 11%. Same-store operating expenses were up 1.7% with same-store labor hours down 2.4%.
• Fourth Quarter Details: Diluted EPS was $2.63 (+12%), inside sales rose 12.4%, prepared food/dispensed beverage sales rose 9.7%, and grocery/general merchandise sales rose 13.5%. Same-store fuel gallons sold were up 0.1% with a margin of $0.376 per gallon. Operating expenses were up 14.5%.
• Casey's Rewards: Over 9 million members; value proposition with competitive prices in prepared foods and private label products.
• Store Growth: Excited about continuing store growth strategy with plans to open at least 80 stores in fiscal 2026, part of a 3-year plan to open ~500 stores.

Segment Performance

• Inside Sales: Total inside sales grew 10.9% during fiscal 2025, with same-store sales up 2.6%. In the fourth quarter, total inside sales rose 12.4% to over $1.4 billion.
• Prepared Food and Dispensed Beverage: Total sales grew 10.3% for fiscal 2025, with same-store sales up 3.5%; fourth quarter sales rose 9.7% to $392 million.
• Grocery and General Merchandise: Total sales grew 11.2% for fiscal 2025, with same-store sales up 2.3%; fourth quarter sales rose 13.5% to $1.02 billion.
• Fuel: Gross profit was up 11% for fiscal 2025, with total gallons sold up 13%; fourth quarter same-store gallons sold were up 0.1% with a fuel margin of $0.376 per gallon.

Guidance

• Fiscal 2026 outlook includes EBITDA increase of 10%-12%, inside same-store sales growth of 2%-5%, inside margin ~41%, same-store fuel gallons sold in range of -1% to +1%, total operating expenses increase of 8%-10%, plan to open at least 80 stores, net interest expense ~$110M, depreciation ~$450M, property and equipment purchase ~$600M, and tax rate 24%-26%. The Fikes acquisition is expected to be accretive to EBITDA but dilutive to EPS.

Risks

• Integration of recent acquisitions.
• Ability to execute strategic plan and realize benefits.
• Impact and duration of the conflict in Ukraine and related governmental actions.
• Inflation and its impact on costs.
• Weather and economic conditions affecting sales.

Q: So I just wanted to start on fuel margins. Fuel margins came in, I think, quite a bit better than many were expecting despite that CEFCO headwind that I believe you said was around $0.02 per gallon. So can you just speak to progress on synergies there? How you expect that headwind to trend in '26? And just anything else that contributed to that outperformance?

A: Darren M. Rebelez says the team managed fuel pricing well, with progress on upstream fuel procurement capabilities contributing to stronger margins, and expects the $0.02 CEFCO headwind to carry through in 2026.

Q: Just wanted to talk about the same-store sales outlook for fiscal '26 in that 2% to 5% range. I guess it's just a little lower on the low end there than the past several years, I believe. I'm just wondering if that's just some conservatism or if there's anything you're seeing from your customers that suggest that, that lower end is possible? And can you elaborate more on the wings test? I think I heard the word encouraging there, but what have you learned with that? And is there any meaningful contribution from that built into the fiscal '26 plan?

A: Darren M. Rebelez states they feel comfortable with the same-store sales range, citing conservatism due to global events, and mentions the wings test is in ~225 stores with encouraging feedback but no meaningful contribution built into fiscal 2026 plan yet.

Q: Congrats on the quarter. If we look at the pace of kitchen installations at the acquired CEFCO stores, can you give us an idea where you're at on that? And how rapidly you can go during the next few fiscal years because you've got a lot in the pipeline.

A: Darren M. Rebelez says kitchen installations are driven by permitting timelines, with no material conversions planned for fiscal 2026, and bulk of remodeling activity expected in the next 2 years.