Casey's General Stores, Inc. Q2 FY2026 earnings call

• Congratulated the Casey's team for their hard work throughout the quarter. - Highlighted the positive impact on veterans and their families through the annual roundup campaign, raising $1.2 million in November 2025. - Diluted EPS finished at $5.53 per share, up 14% from prior year; net income was $206 million, up 14% y/y; EBITDA $410 million, up 17.5% y/y. - Inside sales: Prepared food and dispensed beverage strong, breakfast exceptional; grocery and general merchandise margin expansion due to favorable mix. - Fuel: Fourth consecutive quarter of fuel gallon growth, margin up 1.4¢ per gallon. - Gross profit driven by higher inside and fuel gross profit.

Inside same-store sales were up 3.3% for the second quarter, or 7.5% on a two-year stack basis, with an average margin of 42.4%. Same-store prepared food and dispensed beverage sales were up 4.8% or 10.3% on a two-year stack basis with an average margin of 58.6%. Same-store grocery and general merchandise sales were up 2.7%, or 6.4% on a two-year stack basis with an average margin of 36%. On the fuel side, same-store gallons sold were up 0.8% with a fuel margin of 41.6 cents per gallon. Total revenue for the quarter was $4.51 billion, an increase of $559 million or 14.2% from the prior year. Gross profit was $1.12 billion, an increase of $163 million or 17% from the prior year.

• Fiscal 2026 EBITDA expected to increase 15% to 17%. - Inside same-store sales expected to increase between 3% to 4%, inside margin 41% to 42%. - Tax rate expected to be 24% to 25%. - Third-quarter operating expense expected to be up mid-single digits, lapping Fikes acquisition.

• Uncertainties around integrating recent acquisitions. - Impact and duration of conflicts in oil-producing regions and related governmental actions. - Risk of not realizing benefits from strategic plan.

Q: Good morning, everyone, and thank you for taking my question. Good morning, I've had I wanted to, you know, just start on fuel. I mean, obviously, the backdrop has been challenging. You've been outperforming. Can you just maybe talk a bit about the sustainability of that? And then Q3 is off to a good start. I mean, it seems like rock prices have helped. Do you expect margins to just kind of revert back in short order? And then stepping back on all this, has anything changed fundamentally either with your approach here or the competitive backdrop that we should be aware of?

A: Yeah. Hey, Ed. Good morning. This is Steve. I'll maybe start on a couple of those. Certainly nothing has changed with our approach. Maybe start with that. I think some of the results that the team has had so much success delivering are directly related to how consistent we have been with our approach of trying to balance profitability and volume to the pad. They've done an excellent job of having a consistent offer available to guests and we firmly believe that contributes for sure to the success that we've had. You know, our fly track around our performance relative to the rest of the market begins with the store. And so the fact that the vast majority of our guests are coming to the store to go inside the store, three out of four of our transactions don't involve a purchase of fuel gives us a lot of stickiness with those guests. Our guests, we believe, are a little less elastic than the average guest because they're already coming to the pad. It's for the inside the store offers, so that is certainly helped our outperformance relative to the market that we're in. As it relates to the seasonality of margins, I guess, is how I would address the question. Generally speaking, the winter for us, the third and fourth quarters, we're going to have seasonally lower margins than we do in the first half of the year. That's been the case for a while. We don't have any reason to expect that that would be significantly different. Beyond the recognition of what happens seasonally, we really don't prognosticate around what's gonna happen with forward-looking margins and beyond what November experience has been.

Q: Hey, guys. This is Ryan Bulger on for Chuck here. Thanks for taking the question, and good to talk to you today. Morning. My pleasure. Oh, sorry. Question was gonna be on the mix dynamic as you see these Cefco stores rolling to the base. The comp base next quarter. Obviously, we've been talking about the impact on margins for a while, but was just wondering if you could speak to anything you would expect to see in terms of how that would play out with the mix differences there traffic and ticket, etcetera, and any impact it could have on comps as they roll into the base next quarter? Thanks.

A: Yeah. Ryan, this is Darren. Clearly, Cefco stores are carrying a lower margin than the Casey's stores, both in prepared foods and in grocery and general merchandise. And that's because they're still Cefco stores. They're not Casey's stores yet. Now that effort in terms of rebranding will start to kick off in earnest at the beginning of the calendar year. We'll start converting their larger stores that have kitchens in them already. Those are a little bit easier from a conversion standpoint. And then once we get those done, we'll start to convert the other stores. So we would expect that trajectory will change a bit. On the prepared food side in particular once we get those kitchens in and they're rebranded to Casey's. And they get our full assortment with private label and all the rest. So we expect that margin to accrete over time, but as it stands right now, their margin rate in prepared foods is about half of what the mothership Casey's prepared foods margin is. So it is going to have an impact. I was really proud of the team this quarter in terms of managing the rest of the business whether it's through cost of goods management, waste management, and overall execution so that we mitigated that impact from the Cefco stores onto the overall Casey's portfolio.