Casey’s Earnings: Q1 Beat on Inside Sales Growth and Fuel Strength
- Hardik Shah
- Sep 9
- 3 min read
TLDR
Revenue Strength: Sales rose 11.5% to $4.6B, fueled by acquisitions and same-store growth.
Margin Trends: Grocery margin expanded; fuel margins held above $0.40/gal.
Forward Outlook: Management confident in strategic plan, with continued store remodels and disciplined M&A pipeline.
Business Overview
Casey’s General Stores, Inc. operates 2,895 convenience stores across 19 Midwestern and Southern states, including Iowa, Missouri, Illinois, and Texas. Its business model combines prepared foods (pizza, bakery, beverages), grocery and general merchandise, and fuel sales. The company also runs a wholesale fuel network and distribution centers in Iowa, Indiana, and Missouri, supporting efficient supply and logistics. With over 9.5M loyalty members through Casey’s Rewards, the company leverages guest data for promotions and product mix optimization.
Casey's Earnings
Revenue: $4.57B, up 11.5% YoY, driven by higher inside sales (+14.2%) and fuel gallons sold (+18%), partially offset by lower average retail fuel prices.
Gross Profit: $1.11B, up 16.5% YoY, with inside gross profit margins at 41.9%.
Net Income: $215M, up 19.5% YoY. Diluted EPS: $5.77 vs. $4.83 last year.
EBITDA: $414M, up nearly 20%.
Margins: Prepared food and beverage margin 58% (down 30bps, impacted by SEFCO acquisition drag); grocery and general merchandise margin 35.9% (+50bps from favorable mix). Fuel margin was $0.41 per gallon (up slightly YoY).
CEO Darren Rebelez noted: “Our fuel team is doing an excellent job balancing fuel volume and margin, achieving positive same-store gallons and margins above $0.40 per gallon.”
Forward Guidance
Management Outlook: No formal update until Q2, but August trends aligned with guidance expectations. Fuel margins held near $0.40/gal, and cheese costs were slightly favorable YoY.
Risks & Opportunities: Inflationary pressures remain a watchpoint; SEFCO/CEFCO store conversions will weigh on prepared food margins until remodeling progresses. Management highlighted confidence in executing its three-year strategic plan.
CFO Steve Bramlage emphasized: “Our balance sheet remains in excellent condition, and we have more than ample financial flexibility.”
Operational Performance
Inside Sales: Same-store sales rose 4.3% overall; prepared food & beverage led at +5.6%, supported by strong pizza and bakery demand. Grocery rose 3.8% on beverages and nicotine alternatives.
Fuel: Same-store gallons up 1.7%, outperforming the Mid-Continent regional decline (-3%). Market share gains reflect Casey’s competitive pricing and food-fuel synergy.
SEFCO Integration: Still a margin drag (~110bps) on prepared foods; full benefits expected post-remodels.
Expense Control: Same-store labor hours down 1% through efficiency initiatives.
Market Insights
Casey’s continues to win in its Midwest core, where EV adoption is slower, but the company is piloting 230 charging stations at 47 stores across 13 states. Industry trends show resilience in prepared foods and beverages, even as cigarette sales face pressure among lower-income consumers. Casey’s food-forward strategy provides insulation versus peers reliant on tobacco.
Consumer Behavior & Sentiment
Consumer strength remains broad-based:
Lower-income cohorts (<$50K) are still active, though slightly less than higher-income groups.
Prepared food, especially whole pies, resonates strongly across demographics.
Value perception remains high, reducing fuel price shopping behavior.
Promotions and loyalty insights continue to drive basket growth.
Strategic Initiatives
Product Innovation: Ongoing tests in new categories like chicken wings.
M&A: Smaller deals remain active; larger opportunities are being evaluated.
Digital & Loyalty: 9.5M Rewards members provide data-driven personalization.
Fuel 3.0 Initiative: 8.8% of fuel procurement through this strategy, improving supply flexibility, largely from Fikes assets.
Capital Allocation
Dividends: Maintained at $0.57/share.
Buybacks: $31M repurchased in Q1; $264M remains authorized.
Leverage: Debt-to-EBITDA at 1.8x; liquidity of $1.4B supports growth and shareholder returns.
Capex: $110M in property/equipment; focus remains on EBITDA- and ROIC-accretive growth.
The Bottom Line
Casey’s delivered a strong start to FY2026, with double-digit revenue growth, market share gains in fuel, and resilient consumer demand across income cohorts. Near-term headwinds from SEFCO integration and inflation remain, but whole-pie growth, loyalty-driven merchandising, and disciplined capital allocation give management confidence. Investors should watch the pace of store remodels, Fuel 3.0 expansion, and M&A activity as key inflection points.
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