On December 9, 2024, Casey's General Stores Inc (CASY, Financial) released its 8-K filing for the second quarter of fiscal year 2025, showcasing a robust financial performance. As the third-largest convenience store chain in the United States, Casey's operates over 2,600 locations, primarily in the Midwest, with a significant presence in rural towns. The company generates a substantial portion of its gross profit from in-store sales, including grocery items, prepared meals, and general merchandise.
Financial Performance and Challenges
Casey's reported a diluted earnings per share (EPS) of $4.85 for the quarter, exceeding the analyst estimate of $4.26. This represents a 14% increase from the same period last year. Net income rose to $181 million, and EBITDA reached $349 million, both up 14% year-over-year. These results were driven by higher inside and fuel gross profits, although they were partially offset by increased operating expenses due to the addition of 93 new stores.
Despite the positive earnings, Casey's faced challenges with same-store fuel gallons, which decreased by 0.6% compared to the previous year. This decline highlights potential issues in maintaining fuel sales volume, a critical component of the company's business model.
Key Financial Achievements
Inside same-store sales grew by 4.0%. There was a notable 12.0% increase in total inside gross profit, reaching $619.7 million. The inside margin improved to 42.2%, driven by strong performance in the prepared food and dispensed beverage category. Fuel gross profit also saw a modest increase of 1.1%, totaling $312.3 million, despite a slight decrease in fuel margins to 40.2 cents per gallon.
Income Statement and Balance Sheet Insights
Casey's total inside sales for the quarter amounted to $1.47 billion, a 9.0% increase from the previous year. The company's operating expenses rose by approximately 5%, primarily due to the expansion of its store network. As of October 31, 2024, Casey's had $1.25 billion in available liquidity, including $352 million in cash and cash equivalents.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income (in thousands) | $180,918 | $158,782 |
| Diluted EPS | $4.85 | $4.24 |
| EBITDA (in thousands) | $348,880 | $305,858 |
Operational Efficiency and Expansion
Casey's continued to focus on operational efficiency, reducing same-store labor hours for the tenth consecutive quarter. The company also expanded its footprint by acquiring 198 CEFCO Convenience Stores from Fikes Wholesale, which closed on November 1, 2024. This acquisition is expected to impact the company's financials in the coming quarters, with anticipated one-time deal and integration costs.
Casey's delivered a strong second quarter highlighted by robust inside gross profit growth," said Darren Rebelez, Board Chair, President and CEO. "Inside same-store sales were driven by the prepared food and dispensed beverage category, with hot sandwiches and cold dispensed beverage performing exceptionally well."
Analysis and Outlook
Casey's General Stores Inc (CASY, Financial) demonstrated resilience in its second-quarter performance, surpassing earnings expectations and achieving significant growth in inside sales. However, the decline in same-store fuel gallons and increased operating expenses pose challenges that the company must address. The recent acquisition of Fikes Wholesale is expected to contribute positively to future earnings, although it will incur initial costs. Overall, Casey's strategic focus on expanding its store network and enhancing operational efficiency positions it well for continued growth in the competitive retail sector.
Explore the complete 8-K earnings release (here) from Casey's General Stores Inc for further details.
