• Diluted Earnings Per Share: $4.85, up 14% from the prior year.
• Net Income: $181 million, up 14% from the prior year.
• EBITDA: $349 million, up 14% from the prior year.
• Total Revenue: $3.9 billion, a decrease of 2.9% from the prior year.
• Total Inside Sales: $1.47 billion, an increase of 9% from the prior year.
• Prepared Food and Dispensed Beverage Sales: $418 million, an increase of 9.2%.
• Grocery and General Merchandise Sales: $1.05 billion, an increase of 8.8%.
• Fuel Margin: $0.402 per gallon.
• Gross Profit: $959 million, an increase of 8.2% from the prior year.
• Inside Gross Profit Margin: 42.2%, up 110 basis points from the prior year.
• Operating Expenses: Up 5.2% or $30 million.
• Same-Store Sales: Inside sales up 4%, prepared food and dispensed beverage sales up 5.2%.
• Store Growth: Operating approximately 4% more stores year-over-year.
• Free Cash Flow: $160 million, compared to $145 million in the prior year.
• Leverage Ratio: Debt-to-EBITDA at 2.3 times.
• Dividend: Quarterly dividend maintained at $0.50 per share.

• Warning! GuruFocus has detected 6 Warning Signs with UNFI.

Release Date: December 10, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Casey's General Stores Inc (NASDAQ:CASY) reported a 14% increase in diluted earnings per share, net income, and EBITDA compared to the previous year.
• The company successfully expanded gross profit dollars while controlling operating expenses, showcasing the strength of its business model.
• Inside same-store sales increased by 4% for the second quarter, with prepared food and dispensed beverage sales leading the way.
• The acquisition of Fikes is expected to contribute significantly to inside sales and fuel gallons in the second half of fiscal 2025.
• Casey's General Stores Inc (NASDAQ:CASY) maintained a strong balance sheet with total available liquidity of $1.25 billion as of October 31, 2024.

Negative Points

• Total revenue for the quarter decreased by 2.9% from the prior year, primarily due to a decline in the retail price of fuel.
• Same-store fuel gallons sold were down 0.6%, although the company outperformed its geographic region.
• The Fikes acquisition is expected to be modestly dilutive in the third quarter due to onetime deal and integration costs.
• Operating expenses increased by 5.2%, with a significant portion attributed to unit growth and wage increases.
• The effective tax rate increased to 24.5% from 23.6% in the prior year, driven by a onetime benefit that did not repeat.

Q & A Highlights

Q: Can you discuss the factors driving the strong Grocery and General Merchandise margins, and whether this is a structural change? A: Darren Rebelez, CEO, explained that the margin improvement is largely due to a mix shift towards higher-margin items, such as premium alcohol and nicotine alternatives. Additionally, asset protection efforts have reduced shrink. This mix shift is expected to be structural and continue benefiting margins.

Q: Is there any seasonality in the Fikes acquisition's EBITDA, and is it still trending around $90 million? A: Steve Bramlage, CFO, noted that Fikes does have some seasonality, with the second half of the year typically smaller than the first. The $89 million LTM EBITDA figure remains a good baseline, though it includes contributions from ramping stores.

Q: What are the expectations for same-store inside sales growth in the second half of the fiscal year? A: Steve Bramlage, CFO, stated that traffic was positive, and November sales were at the midpoint of the guidance range. The company expects to maintain the 3% to 5% growth range, with no significant changes in consumer behavior anticipated.

Q: How is Casey's addressing competition in the prepared food segment, particularly with pizza and QSRs? A: Darren Rebelez, CEO, mentioned that Casey's value proposition remains strong, especially in sandwiches, without needing aggressive promotions. In pizza, Casey's pricing is competitive, often $1 to $2 below major competitors, with half of their stores facing no direct competition.

Q: What is the timeline for integrating Fikes stores and incorporating their fuel assets? A: Darren Rebelez, CEO, indicated that remodeling Fikes stores will take a few years, with initial tests to integrate food programs. Fuel integration, including pricing and procurement, will occur more quickly, with full integration expected in three to four years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.