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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Casey's General Stores-Store-Front

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-371-Casey's General Stores

The chain of convenience stores is headquartered in Ankeny, Iowa, and is affectionately known for its made-from-scratch pizza.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-378-Caseys-General-Store

Iowa-based Casey's operates more than 2,000 convenience stores in 16 states.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Casey’s General Stores is a leading convenience store chain primarily located in the Midwest and Southern United States, known for its friendly service and community-focused approach. Casey’s offers a wide range of products including fuel, groceries, snacks, beverages, and household essentials. The company is especially well-known for its made-from-scratch pizza, fresh bakery items, and hot food. With thousands of locations, Casey’s advertises its grab-and-go food options.

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Casey's General Stores (CASY): Company Profile, Stock Price, News, Rankings

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Casey's General Stores

casey's general stores

Today, and welcome to the First Quarter of Fiscal Year 2026 Casey's General Stores Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Brian Johnson, Senior Vice President, Investor Relations and Business Development. Please go ahead.

Good morning, and thank you for joining us to discuss the results from our first quarter ended July 31, 2025. I am Brian Johnson, Senior Vice President, Investor Relations and Business Development. With me today are Darren Rebelez, Chairman, President, and Chief Executive Officer, as well as Steve Bramlage, Chief Financial Officer. Before we begin, I'll 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 for 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 future results expressed or implied by those forward-looking statements, including but not limited to the integration of the recent acquisitions, our ability to execute on our strategic plan or to realize benefits from the strategic plan, the impact and duration of conflicts in oil-producing regions and related governmental actions, as well as other risks, uncertainties, and factors which are described in our most recent annual report on Form 10-K and 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 the operating expense increase for the quarter, can be found on our website at www.caseys.com under the Investor Relations link. With that said, I would now like to turn the call over to Darren to discuss our first quarter results. Darren?

Thanks, Brian, and good morning, everyone. Before we dive into our strong first quarter performance, I'd like to congratulate the entire Casey's team for executing an outstanding summer plan at a high level and delivering a terrific guest experience across Casey's country. I'd also like to highlight the positive impact Casey's is making on our communities. As students head back to school, Casey's is excited to see the impact of our Cash for Classrooms grants come to life. Last year, we awarded $900,000 to schools throughout our communities. Thanks to the generosity of our guests and team members, along with the support from our supplier partner, Coca-Cola, this August's campaign raised over $1 million, fueling our continued commitment to supporting education and enriching the lives of children across our footprint. Now let's discuss the results from the quarter.

Diluted EPS finished at $5.77 per share, a 19% increase from the prior year. The company generated $215 million in net income and $414 million in EBITDA, both of which are an increase of 20% from the prior year. Inside the store, we saw positive traffic growth as guests responded well to our innovation and promotional activity in the prepared food and dispensed beverage category. We also experienced margin expansion driven primarily by the grocery and general merchandise category. 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. As we work through the last year of our three-year strategic plan, I'm extremely confident in our team's ability to execute at a high level and continue to grow the business.

I would now like to go over the results and share some of the details in each of the categories. Inside same-store sales, we're up 4.3% for the first quarter, or 6.7% on a two-year stack basis, with an average margin of 41.9%. Same-store prepared food and dispensed beverage led the way, as sales were up 5.6%, or 10.2% on a two-year stack basis, with an average margin of 58%. Whole pies and bakery performed well in the quarter. Margin was down approximately 30 basis points from the prior year, as a lower margin from the recently acquired CEFCO stores was partially offset by modest retail price adjustments, primarily in bakery and cost of goods management.

Same-store grocery and general merchandise sales were up 3.8%, or 5.4% on a two-year stack basis, with an average margin of 35.9%, an increase of approximately 50 basis points from the prior year, primarily due to favorable mix shift to higher margin items such as energy drinks and nicotine alternatives within their categories. Turning to fuel, same-store gallons sold were up 1.7%, with a fuel margin of $0.41 per gallon. According to OPIS fuel gallon sold data, the Mid-Continent region saw an approximate 3% decline this quarter, suggesting we continue to grow market share. The fuel team is successfully balancing volume and margin, and the performance shows it. We continue to be judicious managing operating expense with an increase of 3% on a same-store excluding credit card fee basis, lapping a 0.7% increase in the prior year.

Our focus on simplifying the operations once again resulted in reduced training and overtime hours, yielding an overall decrease of 1% same-store labor. I would now like to turn the call over to Steve to discuss the financial results from the first quarter.

Thank you, Darren, and good morning. We're clearly starting the third year of our three-year strategic plan on a really strong note, and I'm extremely proud of the hard work of the team during the quarter. Total revenue for the quarter was $4.6 billion. That's an increase of $469 million, or 11.5% from the prior year. That's due primarily to higher inside sales, as well as higher fuel gallons sold, partially offset by a lower retail fuel price. Results were also favorably impacted by operating approximately 8% more stores on a year-over-year basis. Total inside sales for the quarter were $1.68 billion, an increase of $210 million, or 14.2% from the prior year. For the quarter, prepared food and dispensed beverage sales rose by $53 million to $458 million, an increase of 13.2%, and grocery and general merchandise sales increased by $156 million to $1.23 billion.

That's an increase of 14.6%. Retail fuel sales were up $178 million in the quarter, as an 18% increase in fuel gallons sold was partially offset by a 9% decline in the average retail price. The average retail price of fuel during this period was $3.00 a gallon, and that compares to $3.31 a year ago. We define gross profit as revenue less cost of goods sold, but excluding depreciation and amortization. Casey's had gross profit of $1.11 billion in the quarter, an increase of $157 million, or 16.5% from the prior year. This is driven by both higher inside gross profit of $91.1 million, or 14.8%, as well as higher fuel gross profit of $59 million, or 18.8%. Inside gross profit margin was 41.9%, up 20 basis points from a year ago, and prepared food and dispensed beverage margin was 58%. That's down 30 basis points from prior year.

Cheese was $2.11 per lb for the quarter, compared to $2.09 per lb last year. That's an increase of 1% or less than 10 basis points. There was an approximately 110 basis point headwind from the CEFCO stores that was partially offset by modest retail price adjustments, as well as strong cost of goods management. The grocery and general merchandise margin was 35.9%, an increase of 50 basis points from the prior year, and the change is primarily due to favorable mixed shift within the category. Fuel margin for the quarter was $0.41 per gallon. That's up $0.003 per gallon from prior year. This is inclusive of an approximately $0.015 per gallon drag due to the CEFCO stores. Total operating expenses were up 14.6%, or $88.7 million in the quarter.

Approximately 10% of the total operating expense increase is due to unit growth, as we operated 221 more stores than in the prior year. Same-store employee expense accounted for approximately 1.5% of the increase, as modest increases in wage rates were partially offset by the reduction in same-store hours. Higher insurance and property taxes contributed to approximately 1% of the increase. Net interest expense was $26.9 million in the quarter. That's up $12.8 million versus the prior year, which is primarily due to the financing associated with the Fikes transaction. Depreciation in the quarter was $109 million. That's up nearly $15 million versus the prior year, primarily due to operating more stores. The effective tax rate for the quarter was 22.7%. That's compared to 24.1% in the prior year. The decrease was driven by an increase in tax benefits that we recognized on share-based awards.

Additionally, as part of the One Big Beautiful Bill Act, our cash taxes will be reduced by approximately $90 million related to capital spending over the course of the fiscal year. This will not impact the tax rate for EPS purposes. Net income was up versus the prior year to $215.4 million, an increase of 19.5%. EBITDA for the quarter was $414.3 million. That's an increase of 19.8%. Our balance sheet remains in excellent condition, and we have more than ample financial flexibility. On July 31st, we had total available liquidity of $1.4 billion. Also, on July 31st, our debt-to-EBITDA ratio was 1.8x as calculated under the covenants in our credit facilities.

For the quarter, net cash generated by operating activities was $372 million, plus purchases of property and equipment of $110 million, resulted in the company generating $262 million in free cash flow, and that compares to $181 million generated in the prior year. At the September meeting, the board voted to maintain the quarterly dividend at $0.57 per share. During the first quarter, we repurchased approximately $31 million in shares, and we have approximately $264 million remaining on our existing share repurchase authorization. As a reminder, investing in EBITDA and ROIC-accretive growth investments remains our primary capital allocation priority, but consistent with our fiscal year 2026 outlook, and given our modest leverage levels of strong cash flows, we repurchased shares during the quarter, and we expect to continue to do so for the remainder of the fiscal year.

Consistent with our past practice, we plan to update annual guidance on our second quarter earnings call when we're through the seasonally largest time of the year. Our results for August were as follows: same-store volumes, both inside and outside the store, are consistent with our annual guidance expectations. Fuel CPG was near $0.40 per gallon, and current cheese costs are slightly favorable versus the prior year. As a reminder, the second quarter is the final quarter where we're going to be comping non-ownership of Fikes in the prior year. With this in mind, we expect the second quarter operating expense to be up mid-teens, as we had previously communicated. I'll now turn the call back over to Darren.

Thanks, Steve. I'd like to thank the entire Casey's team for an outstanding first quarter. We started our fiscal year off strong and are doing an excellent job of executing on the three-year strategic plan. The summer months are the busiest inside the store, and our team met guest expectations extremely well. Our merchandising plan for the summer was executed at a high level throughout the organization, from those that created the plan to those at the stores carrying out the plan, to our supply chain and fuel teams, and every team member in between. This team effort resulted in positive traffic to our stores and strong performance across the entire business. We also brought back our most popular LTO with the barbecue brisket pizza, and whole pies were a growth driver for the category.

Using guest insights and data gathered from our nearly 9.5 million Casey's Rewards members helped us get the right products on the shelves at competitive prices for our guests. All of this resulted in strong same-store results that were primarily driven by positive units and traffic. At the pump, we continue to gain market share as our same-store gallons growth outpaced OpusD ata in our region. We believe our robust inside offering and competitive fuel pricing give guests reasons for Casey's to be the one-stop shop for prepared food, grocery items, and fuel. Overall, we're extremely excited about the Casey's business model and have high confidence in our ability to carry this momentum into the future. We'll now take your questions.

Thank you. If you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. We ask that you please limit yourselves to one question and a follow-up. One moment while we compile the Q&A roster. Our first question comes from Pooran Sharma with Stephens Inc. Your line is open.

Good morning, and congrats on a strong quarter here.

Thanks, guys. I just want to start off with maybe understanding fees cost. You mentioned they're slightly favorable versus the prior year. I was just maybe wondering if you could help us unpack that benefit a little bit, and if you could help us understand how much of your needs you have booked for the year.

Pooran, you kind of broke up on that question. Could you repeat that, please?

Yeah, just wondering if you could help us unpack the benefit from lower cheese cost and help us understand how much of your needs you have booked for the year.

Yeah. In the quarter, it was obviously really close to prior year. I mean, we were a little less than 10 basis points difference on a year-over-year basis from a cheese cost perspective. As we sit here today, we are about 70% locked on our forward cheese requirements for the remainder of this fiscal year. Q2, three, and four are all right around 70% locked. We only lock if we can lock it at comparable or generally slightly favorable rates on a year-over-year basis. We feel pretty good about the certainty of cheese costs going forward. With the 30% of the strip that's open for us in the second quarter and the 70% we have hedged, that's why we're sitting here today. We're just a little bit ahead on a year-over-year basis.

Okay. Appreciate that color there. I just wanted to understand kind of the strength behind the fuel business. You mentioned it in your prepared comments. You know you're outpacing the region. You have a strong offering that drives traffic inside the store. Maybe I was wondering if you could talk about Fuel 3.0? Last quarter, I think you said about 3% of your supply was coming in from this initiative. I was wondering if you could provide us with an update on that initiative.

Yeah, Pooran. With respect to Fuel 3.0, we continue to procure more of our fuel through that vehicle. For the combined business, it's about 8.8% of our total fuel procured. I would say that the majority of that is coming from the Fikes acquisition. As you recall, there's a fuel terminal we picked up, and they had been shipping fuel like this for a while. The bulk of it is there. We're about 3% of our fuel on the base business being procured through Fuel 3.0. Making good progress. The team's still integrating, but we like what we see so far on that.

Thank you. Our next question comes from Chuck Cerankosky with Northcoast Research . Your line is open.

Good morning, everyone. Great quarter. Could you go into a little more detail on price versus volume in-store, please? You mentioned bakery, but how about some of the other categories?

Overall, Chuck, you know we had about a 1.5% traffic increase, and then about 3% coming from price overall. That will get you roughly your 4.5%. The majority of that price is coming through the tobacco category with cigarettes. As has been our practice for years, as those manufacturers pass on cost increases, we pass those on to the guests. That's what's driving the tobacco side of it. Outside of that, there's very modest price increases at all in the quarter, and a little bit on candy, just passing on cost increases, but very little. What we're seeing is more units purchased in the basket, which is really helping to drive the sales as well.

Darren, would that increase in units be true of both prepared food and the grocery/merchandise?

Yeah, it is. It is, Chuck. I mean, more so in the prepared foods than in the grocery, but I mean, we're seeing really good strength in non-alcoholic beverages in the grocery category and in snacks as well.

Thanks a lot. Have a great rest of the year.

Thank you. Our next question comes from Chuck Grom with Gordon Haskett , your line is open.

Hey, thanks, Great quarter . I'm just wondering if you could just speak to the overall health of your consumer across income cohorts. Any incremental evidence of trade down? Regionally, is there anything to note in the border stores, Texas region?

Yeah, I'll first talk about guest strengths from an income cohort standpoint. For the  Rewards members that we have, where we can really track their behavior and have full visibility, we're really seeing relatively strong performance across all income cohorts. The way we break that down is $50,000 or less in income, $50,000- $100,000, and then everybody above $100,000. The lower income group, that $50,000 and under, are still shopping the stores and still buying at a fairly healthy clip, just not as much as the other income cohorts, about 160 basis points lower than the higher income cohorts, but still coming to the store, still buying. Really, where we're seeing the most strength inside of that is in our prepared foods business.

I think that value proposition or the quantity and quality of the food that you're getting is really resonating with that group as well as the others. Probably on the other side, the category most pressured by lower income consumers is cigarettes, but again, our cigarette mix is lower than most of the industry. I think we're a bit insulated from that perspective. Then you asked about.

Yeah, you asked about the Texas stores. You know, there's a little bit more pressure down there than there is with the base business. Keep in mind also, those CEFCO stores are still CEFCO stores right now. They're not Casey's stores. We've converted three proof-of-concept stores, but we haven't converted anything else. They don't have the food proposition that we have in our base business. As we start to remodel those stores, we'll start to change the trajectory of those businesses. It's under a bit more pressure than our base business at the moment.

Okay. Appreciate that. My follow-up question is just on the CEFCO business, the drag on the prepared foods line in particular. I believe in the back half of last year, it was around 150, 160 basis points. You called out about 110 basis points this quarter, which is a really nice improvement. Can we dive into that? What are you guys making progress on, and how should we think about that drag on the total business in the coming quarters?

Yeah, you know we've made a few adjustments to the assortment, really just kind of some basic stuff, just cleaning up some things where maybe some items weren't selling very well. We've eliminated those items, and that's definitely helped. They've adopted a little bit more of our promotional approach, not 100% yet because they don't have all the assortment, but we're evolving in that direction. We're starting to see a little bit of benefit. We won't see the biggest benefit until we start converting the kitchens and start selling the full assortment. At the moment, their prepared foods business runs at a margin rate just slightly greater than half of the margin rate of a Casey's store. There's going to be that drag until we get those stores converted and fully up to speed.

Just as a reminder, realistically, we don't expect significant synergy capture from remodeling the stores until a year plus from now. That's a function of timing of us being able to get permitting and construction, etc., finished.

Thank you. Our next question comes from Bobby Griffin with Raymond James, your line is open.

Hey, guys. Thanks for taking the questions and a great start to the fiscal year.

I guess, Darren, first, I just wanted to maybe touch on the wings test if there's anything more you can share there. I know you guys are still in kind of very early learnings, but we touched on it last quarter. I was just curious, anything incremental over the last couple of months?

Not too much. The team is definitely working on it. You know we're taking the approach on this that we have with a lot of other product innovations. I think it's worked to our benefit, as we'll continue to work it, continue to evolve it until we get it right, and it'll roll out when it's ready to roll out. We have identified a few opportunities with some flavor profiles, with some builds. We're still tweaking some equipment needs, but we like what we're seeing. We're making progress. As soon as we feel confident we have it completely dialed in, that's when we'll start to expand.

Fair enough. Yeah, I appreciate those details. I guess secondly, it does seem the last couple of quarters, the core prepared food business out of Casey's has really found some nice momentum on the margin side, enough so to even offset the Fikes' dilution. Can you maybe unpack that a little bit more? I mean, I think you guys mentioned Fikes was a 110 basis point drag, so it implies the core was up nicely. How much is left there? What do you think, does that create a better pricing opportunity for you guys to even push harder on competition? How do you think about that if this core margin improvement is sustainable?

Yeah, with our prepared food margin, I think we've got a couple of things. One is, you know, we've made some progress on the procurement side from a cost of goods standpoint. That's certainly helped, particularly on dispensed beverages. I think the other big piece of it is the acceleration of our whole pie business. Our whole pie business is the highest margin subcategory within prepared foods, and it's the largest. When that starts to grow, everything gets better in our prepared food business when that's growing, and that's what we're experiencing right now. We like what we see and hoping for that momentum to continue.

Thank you. Our next question comes from Anthony Bonadio with Wells Fargo . Your line is open.

Yeah. Hey, guys. Good morning. Thanks for taking our question.

Just to dig in a little bit on that earlier fuel question, a lot of your peers are sort of struggling to just tread water on fuel gross profit dollars. You guys managed to grow both same-store gallons and fuel margins with a Fikes headwind in there. Can you just talk a little bit more about what you think is driving that dispersion, and then what you're seeing out there competitively, just given some of the commentary we're hearing from your peers?

Yeah, I'd say there's really three things that we think are helping out our fuel volume. The first is really our prepared foods offer. As we talked about before, Anthony, you fill up your tank once a week or so, but you eat three, four, five times a day. I think with our food proposition really resonating with people, it's driving more traffic to the store. We just simply have more shots on goal from a fuel standpoint once you're already on the lot than perhaps some of our competitors do. The second piece is our value perception. In the research we do with our guest insights team, when we ask guests to compare us to our largest competitors, we score the highest on offering low prices and on good value for the money.

I think there's a perception people are coming to the store anyway for prepared foods, but we also have a great value perception overall with the store. There's not a lot of incentive to go shopping around for fuel price. Great credit to our fuel team. Over the last number of years, they've been able to very consistently execute our pricing strategy. Over time, guests built some confidence around the idea that we're always going to be competitively priced. If you're already at the store anyway and you know we're going to be competitively priced, there's just not a good reason to shop around. I think that consistency has helped our fuel business. We haven't had to get overly aggressive from a margin standpoint because we've been always competitive and consistently so.

Thank you. Our next question comes from Michael Montani with Evercore ISI. Your line is open.

Yes. Hi. Good morning. Thanks for taking the question. I just wanted to ask a two-parter. First off, I was wondering if you could comment a little bit about the M&A backdrop that you're seeing out there, you know, both in terms of smaller deals and then also potentially the larger kind of 50+ store deals. That was one thing. The other one was just on seasonality. I understand you don't want to update the full-year guide, but in the past, you know, 2Q earnings power is usually pretty similar to 1Q, and then you get maybe a 40%, 50% step down in the back half of the year. Just wanted to understand if there's any puts or takes on the timing side or otherwise, you know, we need to keep in mind when we're thinking about kind of the sequential earnings cadence through the year.

All right, Michael. With respect to M&A, I'll let Steve talk about seasonality, but on the M&A front, I would say on the small deal M&A, it's kind of business as usual. Our team is out in the market. We're seeing a lot of interest from sellers. We think that's a good environment. I'd say it's nothing different than normal. On the larger deal M&A, we're having some conversations with folks. We haven't had anything active at the moment, but we're in the market, and we'll see how things evolve as we get through the year. On the seasonality, no changes in our view of how seasonality works. We believe that by the time we get to the second quarter earnings call, we've got visibility really the first seven months of the year at that point.

I think those are seven of the eight largest months we have in our fiscal year, and it just allows us to have a pretty high degree of confidence dialing in a refined view of the full year. We feel like we've had a good start for sure to the beginning of this year, but we've got a lot of work in front of us and a long way to go. We'll stick with the play that we feel has worked for us so far around managing expectations.

Thank you. Our next question comes from Bonnie Herzog with Goldman Sachs. Your line is open.

All right. Thank you. Good morning, everyone. Maybe just a quick.

Good morning. Just a quick follow-up on this topic in terms of phasing because I know you guys mentioned previously that you expected this fiscal year to be more second-half weighted given the timing of the Fikes acquisition. I'm just thinking about it in the context of the strength in Q1. First, love to hear how the quarter came in, maybe relative to your internal expectations. If it was a little bit stronger, does it suggest maybe some conservatism to your guidance this year?

Bonnie, what I tell you is I kind of reiterate what Steve said. You know, we had a great first quarter. We think we're off to a good start from August results we just shared, and you know, we'll update everybody at the end of the second quarter when we have a little bit more visibility into the balance of the year.

I mean, the one thing I would reiterate, Bonnie, is the seasonality dynamic has not changed. I mean, as far as I know in the business, I do think I'd reiterate for everybody the way the comping on a year-over-year basis, right, Fikes heavily influences that, right? We are going to have pretty big total changes in the first half of the year because we didn't have Fikes in a comparable period. You get to the second half of the year, we obviously have Fikes in that prior year period. The total change numbers will look a little bit different because it's just not quite as stark of a difference. That has not changed from any of our guidance expectations either.

Okay. Just one other quick question on promos. You did mention that that really helped drive traffic and strength inside the store in the quarter. Could you maybe quantify your spend levels this quarter versus the prior quarter, then maybe year-over-year? I guess I'm just hoping to understand maybe how much your promo spend has increased, either sequentially or year-over-year. Thank you.

Yeah. I guess the first thing I would point out is a large amount of the promotional activity that you see in a store from us is in conjunction with our vendor partners, right? You know, BOGOs and that sort of thing are very often funded completely or at least partially, certainly within the grocery category, by our vendor partners. That spend per se doesn't show up directly in our financials. The absolute level of promotion for sure has continued to increase as the absolute level of business and the number of stores that we have has increased. The majority of the promotional spending is really not directly being funded by the company.

Thank you. Our next question comes from Kelly Bania with BMO Capital Markets. Your line is open.

Good morning. Thanks for taking our questions. I just wanted to go back to CEFCO now, coming up almost on a year, I guess 10 months, and just curious if there's any more learnings that you can share or even refinements to that original plan for the $45 million in synergies. It sounds like there's some very basic changes that you've been able to make on the inside of the store that's helping margins, just as you kind of step back big picture. Can you give us a little more color about how CEFCO stores are comping and the competitive environment that they're facing?

Yeah. I would say that, broadly speaking, Kelly, that the CEFCO integration is on track with what we expected. I think we described earlier, in the early stages of really any integration, this one's no different. We expect to get more synergy early on from fuel and, in this case, some G&A synergies because we acquired the entire business with a back office and that sort of thing. That is tracking as we would have expected. The biggest synergies come from putting our prepared foods in, and to get that done, we have to remodel stores and put kitchens in. There is a longer lead time on that. We really haven't got that work started in earnest yet, but the team is fully engaged on developing those plans and getting those permits executed so that we can begin that work. I would say, generally speaking, that it's on track.

In terms of how we're comping with, there's a lot of noise in those numbers. There are some changes in behavior that have occurred as we've taken over the operation, particularly on the fuel side. You may recall that they had one person pricing fuel for the entire company. That was their CEO. We're probably taking a little different approach on that. We're seeing some different results both on the volume and margin side. There are puts and takes to that. I think overall, it's working as we would expect. As we start the actual integrations and conversions, we're confident that that performance will accelerate. Steve, do you have anything you want to add to that?

I think we're getting here today. We're ahead on fuel for the reasons Darren said. Expectations were ahead on SG&A from what we had originally set out. I think 45 is still a good number, but I think we feel very good that, you know, the prospects, once we remodel the kitchens, we probably will land the plane above that. Because the bulk of the synergies are coming from kitchens, we really haven't started too soon to provide a different number.

Thank you. Our next question comes from Jacob Aiken-Phillips with Melius Research. Your line is open.

Good morning. I wanted to start with thinking about store growth in the outer years past the three-year target, especially in the context of there are some larger public competitors making some bigger acquisitions as well as some private players with good prepared food offerings kind of aggressively expanding geographically.

I'm sorry, Jacob, was there a question in there?

How should we think about store growth in like outer years in the context of the competition and where you'll expand geographically?

Yeah. With respect to store growth broadly, I mean, we haven't obviously issued our next three-year plan, which we will do in June of next year, and we'll share those numbers. If I step back, our fundamental growth algorithm is trying to drive 8%- 10% EBITDA growth. To get to that 8%, we typically get half of that from growing the base business through all of our merchandising and operational initiatives, and then half of that through store growth. Think about 4% to 5% unit growth per year. About half of that will come from NTIs that we build and source the real estate for, and the other half directionally comes from M&A, typically small deal M&A. We don't typically build in any sort of assumptions on larger scale M&A because those are more opportunistic as sellers become sellers. That's how I would think about it more broadly.

Our geography that we operate in today can support a large number of new stores in it. There's a lot of towns and a lot of white space that do not have Casey's that would benefit from one. We see a really unlimited runway for unit development just within our geography, let alone in the adjacent states to that.

Got it. You've been pretty explicit in benchmarking Casey's against QSRs, both on valuation and on innovation. How do you measure success on the front, and what KPIs should we be looking at to track or gauge the progress there?

To me, success would be looking at how our same-store sales performance measures up to theirs. I would say even more specifically on prepared foods, dispensed beverage. If you look at this quarter as an example, we were up 5.6% same-store or a little over 10% two-year stack. I think that compares really favorably, and that's in prepared foods. That compares really favorably to just about any QSR or pizza concept that's out there that we have visibility to. I would say that the consistency of our results and the absolute magnitude of them would put us in pretty good shape right now relative to those peers.

Thank you. Our last question comes from Corey Tarlowe with Jefferies. Your line is open.

Great. Thanks. I guess, Darren and Steve, I wanted to ask about the grocery and general merchandise category. What's driving the growth? I'm assuming energy drinks is helping. On the margin for the category, I think this is the best gross margin that you've had for the category in a really long time in the first quarter. Could you talk a little bit about the drivers of that and maybe what helped? As we think about what's ahead, maybe what stays in and what comes out, any color you could provide, that would be really helpful. Thanks so much.

Yeah, Corey. I would say the growth driver in grocery and general merchandise has clearly been non-alcoholic beverages. That's been the strongest growth area, a little over 8%. There's some puts and takes on the rest, modest increases here and there, but I would say that is the big driver. As you mentioned, energy drinks being the strongest contributor to that grocery and to the non-alcoholic beverage growth. Really, from a margin standpoint, there are two things going on. I think our team has done a great job in terms of joint business planning and keeping the cost of goods in check and managing retail pricing. We've had good margin management there. You also have a mix dynamic that's really having an impact. If you think about what's going on, the tobacco category or nicotine overall, that mix is dropping.

It's about 130 basis points lower this year than it was last year from a mix perspective. That margin is increasing as the share of combustible cigarettes goes down and the share of nicotine alternatives goes up. You're seeing a little bit higher margin, although in a lower mix. You go to non-alcoholic beverages, which is the highest margin subcategory inside of grocery and general merchandise. That had about a 120 basis point improvement in margin rate, but it's also growing in share by about 120 basis points. You combine those two, and you're just seeing a natural inflation of the margin via the mix. That's really what's going on there.

Got it. That's really helpful. Is there a way to put into context maybe what that could look like more going forward for the gross margin for that category?

Should we expect something close to 36%? I mean, the category has historically been in the low 30s. I'm just curious, how do you think about the trajectory there? Thanks so much.

Yeah, I'd be careful of doing that, right? I'd remind you we're not trying to optimize the margin of either grocery or prepared food. We're trying to deliver the best inside the store gross profit velocity outcome that we can. At times, we will lean into grocery to help drive something in prepared foods or vice versa. It may make a lot more sense for us to reinvest excess margin, as an example, from a grocery momentum into something that drives more prepared food units because that's the highest margin stuff we have in the store. I'd just be real cautious about trying to define kind of the endpoint of where margins are because we're trying to manage the whole thing and improve inside margin and inside gross profit velocity in total.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Mr. Rebelez for closing remarks.

Okay. Thank you for taking the time today to join us on our call. Before we go, I want to once again express my gratitude to our team members for all their hard work this quarter. Have a great rest of the week.

Thank you for your participation. You may now disconnect. Good day.

Casey's General Stores (CASY) Q1 2026 Earnings Call Transcript

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