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Casey's Q3 Earnings Top Estimates, Inside Same-Store Sales Grow 3.7%

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Casey's General Stores, Inc. (CASY - Free Report) reported solid third-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While revenues increased, earnings remained flat year over year. 

The company delivered a strong third quarter, driven by robust sales growth both inside and outside the store. Continued operational efficiencies led to a reduction in same-store labor hours for the 11th consecutive quarter.

Casey's Quarterly Performance: Key Insights

CASY, one of the leading convenience store chains in the United States, posted quarterly earnings of $2.33 per share, which surpassed the Zacks Consensus Estimate of $1.76 while remaining flat year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The company reported total revenues of $3,903.6 million, which beat the Zacks Consensus Estimate of $3,786 million. The metric increased 17.3% from $3,329.2 million posted in the year-ago period.

Total inside sales jumped 15.3% year over year to $1,400.4 million in the fiscal quarter. This was due to strong performances in the prepared food and dispensed beverage categories, which included hot sandwiches and bakery as well as non-alcoholic beverages in the grocery and general merchandise segment. Inside same-store sales increased 3.7% compared with a 4.1% rise registered in the year-ago period. We had expected inside same-store sales to grow 3.9% in the quarter under review.

Insight Into CASY’s Margins & Expenses Performance

Gross profit rose 16% year over year to $912.6 million in the fiscal quarter. The gross margin decreased 20 basis points to 23.4%.

The total inside gross profit increased 14.3% year over year to $573.1 million. Meanwhile, the inside margin decreased 40 basis points to 40.9%, impacted by the addition of Fikes-acquired stores and a coffee promotion highlighting new flavor profiles.

EBITDA increased 11.4% year over year to $242.4 million in the quarter under discussion, driven by higher inside and fuel gross profit. However, this was partially offset by increased operating expenses from 254 additional stores, a one-time Fikes deal and integration costs of approximately $13 million. EBITDA margin declined 30 basis points to 6.2%, slightly below our expectation of 6.3%.

The company witnessed a rise of 18% in operating expenses of $670.2 million. This rise was caused by the operation of 254 additional stores compared with the same period last year, which accounted for about 14% of the increase, including one-time deal and integration costs of approximately $13 million from the Fikes acquisition. An additional 1% of the rise came from same-store employee expenses, where higher labor rates were partially offset by reduced same-store labor hours. We had estimated a 19.7% increase in operating expenses.

Decoding CASY’s Segmental Performance

Prepared Food & Dispensed Beverage sales rose 13.7% year over year to $397.2 million, missing our estimate of $400.1 million. Same-store sales decreased 4.7% compared with 7.5% in the year-ago quarter. The Prepared Food & Dispensed Beverage margin declined 180 bps to 57.8% from 59.6% in the year-ago period. 

Grocery & General Merchandise sales increased 15.9% to $1,003.3 million in the fiscal quarter, surpassing our estimate of $986.7 million. Same-store sales increased 3.3% compared with 2.8% growth in the year-ago quarter. The Grocery & General Merchandise margin grew 30 bps to 34.2% from 33.9% in the year-ago period.

We note that Fuel sales increased 15.4% year over year to $2,366.8 million in the fiscal quarter, surpassing our estimate of $2,355.4 million. Fuel gallons sold jumped 20.4% to $829.8 million, driven by a higher store count and a 1.8% rise in same-store gallons. We anticipated an increase of 22% in fuel gallons sold. The fuel margin decreased to 36.4 cents per gallon from 37.3 cents in the prior-year period.

CASY’s Financial Snapshot: Cash, Debt & Equity Overview

Casey's, which operated 2,893 stores as of Jan. 31, 2025, ended the fiscal quarter with cash and cash equivalents of $394.8 million, long-term debt and finance lease obligations (net of current maturities) of $2.44 billion and shareholders’ equity of $3.42 billion. 

In the fiscal third quarter, the company did not repurchase any shares and has around $295 million available under its current buyback authorization.

Sneak Peek Into CASY’s Outlook

For fiscal 2025, management now expects EBITDA growth to be at least 11%, up from the previous rise of 10%. It expects to invest $500 million in fiscal 2025 compared with the previous estimation of $550 million.

The company still anticipates total operating expenses to increase 11-13%. Casey's expects inside same-store sales to increase 3-5% and an inside margin to be comparable with fiscal 2024. Management foresees same-store fuel gallons sold between negative 1% and positive 1%. The company anticipates opening about 270 stores in fiscal 2025.

Shares of this Zacks Rank #3 (Hold) company have lost 10.9% in the past three months compared with the industry’s 12.3% decline.

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