Casey's General Stores Inc 2027 Q1 Earnings Call

Sir, please go ahead. Good morning, and thank you for joining us to discuss the results of our first quarter ended July 31st, 2026.

My name is Sam James, Senior Vice President, Finance and Investor Relations. With me today are Darren Rebelez, Chairman, President, and Chief Executive Officer, and Steve Bramlage, Chief Financial Officer. Before we begin, I will remind you that certain statements made by us during this investor call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include any statements relating to the potential impact of the Fikes transaction, expectations of future periods, possible or assumed future results of operations, financial conditions, liquidity and related sources or needs, the company's supply chain, business and integration strategies, plans and synergies, growth opportunities, and performance at our stores.

There are a number of known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any uncertainties or any future results expressed or implied by those forward-looking statements, including but not limited to the integration of the recent Fikes acquisition, our ability to execute our strategic plan or realize the synergies from the strategic plan, the impact and duration of conflicts in oil-producing regions and related governmental action, as well as other risks, uncertainties, and factors which are described on our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q, as filed with the SEC and available on our website.

Any forward-looking statements made during this call reflect our current views as of today with respect to future events, and Casey's disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. A reconciliation of non-GAAP to GAAP financial measures referenced in this call, as well as a detailed breakdown of our operating expense increase for the first quarter, can be found on our website at www.caseys.com under the investor relations link. With that said, I'd like to turn the call over to Darren to discuss our first quarter results.

Darren? Thanks, Sam, and good morning, everyone.

Before we go into further detail on our outstanding first quarter performance, I would like to thank the entire Casey's team for their hard work during our 100 days of summer and for the excellent job they did serving our guests. I am also proud of the positive impact we are making on the communities we serve. As students head back to school, our annual Cash for Classrooms giving campaign raised funds for grants that will support schools, students, and teachers. This year, with the help of our guests, team members, and supplier partner Coca-Cola, we raised over $1.8 million. This sets a new record and reflects our shared commitment to invest in the future of the communities we call home.

We are through the first quarter of our fiscal 2027 to 2029 three-year strategic plan that we laid out in June, where we highlighted Casey's advantaged convenience QSR flywheel with our three lines of business under one operating cost structure. Our strong first quarter result is yet another proof point that our advantage model is working as we continue to gain share both inside and outside the store. Now let us discuss the results from the quarter. Diluted EPS finished at $7.37 per share, up 28% from the prior year. Net income was $274 million, an increase of 27% from the prior year. The company generated $485 million in EBITDA, 17% higher than the prior year and up 40% on a two-year stack basis. Inside the store, Prepared Food and Dispensed Beverages remained strong.

PF&DB transactions were up over 100 basis points, driving PF&DB units up nearly 4% versus the same period in the prior year as guests continue to gravitate toward our abundant offering, compelling value, and continued innovation, such as our bacon cheeseburger pizza LTO. Inside margin expansion was driven primarily by Prepared Food and Dispensed Beverage mix. In the forecourt, the capabilities we developed over the past couple of years help us navigate a volatile environment. Fuel margin was nearly $0.48 per gallon, while same store gallons were roughly flat. One note on the quarter. As part of our integration of the Fikes acquisition, approximately 1% of our total store base had a planned disruption associated with remodeling legacy CEFCO stores to Casey's. As a result, same store sales both inside and outside the store faced a slight headwind.

Despite this, we still posted strong same store results for the quarter and remained ahead of schedule on our integration efforts. The stores that have been already remodeled to Casey's in prior periods have performed exceptionally well, and we expect to remodel CEFCO stores throughout the fiscal year. Now with that disclaimer out of the way, I would like to now go over our results and share some of the details in each of the categories. Inside same-store sales were up 3.2% for the quarter, or 7.7% on a two-year stack basis. Gross profit margin for the quarter was 42.2%, up 30 basis points from the prior year. Prepared Food and Dispensed Beverage led the way, as same-store sales were up 4.8%, or 10.7% on a two-year stack basis, with a gross profit margin of 59.3%. The majority of same-store sales growth was from traffic with minimal pricing.

This was highlighted by great performance in whole pies, with units up nearly double digits in the quarter. Same-store grocery and general merchandise sales were up 2.7%, or 6.5% on a two-year stack basis, with a gross profit margin of 35.6%. Energy drinks and nicotine alternatives continue to outperform the category with double-digit growth. The alcohol category, specifically beer, was a headwind during the quarter. On the fuel side, same-store gallons sold were down slightly at 0.3%, but were positive 1.4% on a two-year stack basis, with a fuel margin of $0.478 per gallon. The Mid-Continent region saw an approximate 6% decline this quarter, according to OPIS fuel gallons sold data, indicating that our play is working, and we continue to gain market share and drive guest traffic. In the quarter, same-store operating expense excluding credit card fees increased 5%.

Steve will provide some of the specific puts and takes related to operating expense changes, but I'm extremely proud of our operations team to be able to meet the increased food demand without meaningfully increasing store labor hours, as same-store labor hours were roughly flat for the quarter. I'd now like to turn the call over to Steve to discuss the financial results from the first quarter.

Steve? Thank you, Darren, and good morning.

Before I begin, I also want to share my appreciation for our team members' hard work executing a plan during our busy summer months. It takes the entire organization's buy-in to be able to generate such strong results, which are not easy to achieve. Our total revenue for the quarter was $5.68 billion. That's an increase of $1.11 billion, or 24.3%, from the prior year, due primarily to higher inside sales and a higher retail price of fuel. Higher fuel gallons sold also contributed. The results were favorably impacted by operating approximately 2% more stores on a year-over-year basis. Total inside sales for the quarter were $1.78 billion. That's an increase of $94 million, or 5.6% from the prior year.