Caseys General Stores Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bobby Griffin - Raymond James - Analyst : Congrats on getting the Fikes deal over the finish line. So I guess first from me, I just wanted to kind of dive in a little bit to the Grocery and General Merchandise margin. Another great quarter, second quarter in a row over 35%. So can you maybe talk a little bit more about the puts and takes there? And is this a more structural step up in your view of where the margins in this business -- this side of the business could be at, especially with some of the opportunities like we saw out there with the back bar changes coming and some things like that?

Question: Bobby Griffin - Raymond James - Analyst : That's very helpful. And I guess just my final one for me is just on the Fikes deal itself, is there a seasonality aspect to their EBITDA that we should be aware of? I think some of the investors that were doing some quick math on the $89 million that was given when you announced the deal and REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:30PM, CASY.OQ - Q2 2025 Caseys General Stores Inc Earnings Call then kind of back into what's implied for the guidance change. So I just want to make sure, is there any seasonality aspect we should be aware of? Is that business still trending around $90-ish million in EBITDA as it was when you guys announced the deal?

Question: Bobby Griffin - Raymond James - Analyst : Absolutely. I appreciate the details, and congrats again on a great quarter.

Question: Bonnie Herzog - Goldman Sachs & Co. LLC - Analyst : All right. For same-store inside sales guidance of 3% to 5% for the year, which you maintained, I guess at the midpoint, this does imply a bit of an acceleration in the second half versus the first half. So just curious what will be the drivers of this? And then along those lines, could you maybe touch on how your traffic levels trended in the quarter versus last quarter? And then maybe any color on November and so far in December. And again, outlook for traffic for the -- or heading into next year or the rest of your fiscal year?

Question: Bonnie Herzog - Goldman Sachs & Co. LLC - Analyst : Okay. And can I just clarify something then I'll pass it on. Just in the context of what you just talked about, then are you seeing any change, behaviour, consumer behaviour. Are you seeing any strengthening with the consumer in the context of all of this?

Question: Jacob Aiken-Phillips - Melius Research - Analyst : I just wanted to go a bit into prepared food and the competitive dynamic there. Just wondering what you're seeing in terms of competition with Pizza, other QSR's and if you may feel the need to increase like the promotional or invest some of the gross margin there?

Question: Jacob Aiken-Phillips - Melius Research - Analyst : I appreciate that. And then just wondering if you had any updates on the time line for rebannering the Fikes stores or for incorporating some of their fuel assets into your upstream capabilities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:30PM, CASY.OQ - Q2 2025 Caseys General Stores Inc Earnings Call

Question: Anthony Bonadio - Wells Fargo Securities, LLC - Analyst : Nice quarter. So just wanted to talk a little bit more about guidance. It looks like the back half now implies 8% EBITDA growth, which includes, call it, a 4% headwind from onetime cost in that $15 million to $20 million. So as you guys work through your revision to guidance, I guess, has anything fundamentally changed about how you're thinking about the existing Casey's business in the back half? And then any initial thoughts on the fiscal 25 contribution from synergy capture from Fikes, just trying to better bridge the back half of the year.

Question: Anthony Bonadio - Wells Fargo Securities, LLC - Analyst : Got it. That's super helpful. And then just a follow-up on fuel. I guess just any additional thoughts on how you're thinking about fuel margins in the context of that 10% EBITDA growth. And just to clarify that, I believe mid- to high 30s, you said Q-to-date includes the new sales growth stores. And just any thoughts on how those margins blend in.

Question: Michael Montani - Evercore ISI - Analyst : Congrats on the quarter and getting the Fikes deal completed. I just wanted to ask on the inside margins. First off, if there's anything to be aware of in terms of timing or headwinds, et cetera, that could kind of impact improvement that we've seen in grocery and gen merch into the back half of the year? And then secondly, other than cheese spot, any headwinds you'd call out to the prepared foods side of the gross margins as well?

Question: Krisztina Katai - Deutsche Bank - Analyst : Congrats on nice results. So I wanted to ask on OpEx, but as it relates to the Fikes stores. And now that you've owned them for almost a month and a half. I was wondering if you could just discuss your initial assessment on some of the opportunities at these acquired stores. Just how do you see opportunity to implement many of the same labour hour saving initiatives that were so successful at Casey's? And then what could that general time line look like over the next 18 to 24 months?

Question: Krisztina Katai - Deutsche Bank - Analyst : Got it. That's helpful. And then just a follow-up. I was hoping you could talk a little bit more about your about your joint planning process on the prepared food side of things, which I think is a relatively newer development for you. And then just if you could discuss on the type of benefits you and your vendors look to achieve in the upcoming calendar year.

Question: Corey Tarlowe - Jefferies LLC - Analyst : Darren, I had two for you and then one for Steve. On -- for Darren, I had -- so you mentioned, I think it was energy drinks, where you had seen some nice momentum. I was just curious if you could talk a little bit about what's driving that momentum? And then I was also curious about the effectiveness of the promotions that you've been doing recently and how that's helped support inside sales? And then for Steve, could you just remind us about what the traditional ramp to maturity is for a new Casey's store? And maybe if you could contrast that with Fikes as well?