Casey's General Stores, Inc. CASY reported mixed third-quarter fiscal 2024 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line beat the same. The company demonstrated strength in inside same-store sales, underscoring its ability to engage customers effectively.
Casey's General Stores, Inc. Price, Consensus and EPS Surprise
Casey's General Stores, Inc. price-consensus-eps-surprise-chart | Casey's General Stores, Inc. Quote
A Closer Look at Results
Casey's, 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 $2.20 per share. The metric declined 13% from the $2.67 reported in the year-ago period. Also, the bottom line was slightly lower than adjusted earnings per share of $2.36 in the year-ago period.
Total revenues of $3,329.2 million fell short of the Zacks Consensus Estimate of $3,487 million and declined a meager 0.1% from $3,332.6 million in the same period last year.
Total inside sales jumped 9.5% year over year to nearly $1,215 million in the quarter. This was driven by a stellar performance in the prepared food and dispensed beverage category, including whole pizza pies, hot sandwiches and dispensed beverages, as well as non-alcoholic and alcoholic beverages in the grocery and general merchandise category. Inside same-store sales increased 4.1% year over year, whereas it registered a 5.6% rise in the year-ago period. We had expected inside same-store sales to increase 4% in the third quarter.
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Margins & Expenses
Gross profit increased 6.6% year over year to $3,329.2 million in the quarter. The gross margin expanded 150 basis points (bps) to 23.6%. The total inside gross profit increased 11.3% to $501.5 million. Meanwhile, the inside margin increased 70 basis points to 41.3% due to the softening of prepared food and dispensed beverage ingredient costs, as well as modest retail price modifications.
EBITDA declined 1.8% year over year to $217.6 million in the quarter under discussion. This can be because of a favorable fuel margin in the prior year, the overlapping of a one-time operating expense benefit mentioned previously, and increased operating expenses from running 167 extra stores. However, this decline was somewhat mitigated by increased profitability from in-store operations.
Casey's witnessed a rise of 10.3% year over year in operating expenses of $568.9 million. About 3% of the rise was due to a one-time $15-million benefit to operating expenses from last year's legal resolution. Operating 167 additional stores from the prior year contributed roughly 6% to the increase. Finally, total same-store employee expenses accounted for about 1% of the rise, with higher labor rates being partially offset by reduced labor hours in the same stores. We had estimated a 12.8% increase in operating expenses.
Performance of Categories
Prepared Food & Dispensed Beverage sales rose 11.5% year over year to $349.4 million, slightly lagging our estimated growth of 11.6%. Same-store sales improved 7.5% compared with 5% in the year-ago quarter. The Prepared Food & Dispensed Beverage margin grew 230 basis bps to 59.6% from 57.3% in the year-ago period.
Grocery & General Merchandise sales rose 8.8% year over year to $865.5 million in the quarter, faring better than our estimate of 8.5%. Same-store sales increased 2.8% compared with 5.8% growth in the year-ago quarter. The Grocery & General Merchandise margin declined 10 bps to 33.9% from 34% in the year-ago period.
We note that Fuel sales declined 4.9% year over year to $2,051.7 million in the quarter. Fuel gallons sold jumped 6.9% to $689.3 million due to an increase in store count. We had anticipated a rise of 5.7% in fuel gallons sold.
Fuel gallon same-store sales declined 0.4% year over year in the quarter under review. Fuel gross profit declined 2% to $257.2 million. We note that the fuel margin decreased to 37.3 cents per gallon from 40.7 cents per gallon in the prior-year period.
Store Update
As of Jan 31, 2024, the company operated 2,639 stores. Casey's expects to add at least 150 stores in fiscal 2024.
Other Financial Aspects
Casey's ended the quarter with cash and cash equivalents of $177.9 million, long-term debt and finance lease obligations (net of current maturities) of $1,583.6 million, and shareholders’ equity of $2,947.5 million.
In the fiscal third quarter, CASY repurchased shares worth approximately $30 million. It expects to repurchase at least $100 million in shares throughout the fiscal 2024. The company has $310 million remaining under its existing share repurchase authorization.
FY24 Outlook
For fiscal 2024, the company estimates a same-store inside sales increase of 3.5-5% and an inside margin of 40-41%. Management foresees same-store fuel gallons sold between negative 1% and positive 1%. It expects fiscal 2024 EBITDA growth to be in line with the long-term strategic plan's target of 8-10%.
The company anticipates total operating expenses to increase 6-8%. It expects to invest $500-$550 million in property and equipment in fiscal 2024.
Shares of this Zacks Rank #2 (Buy) company have rallied 42% in the past year in tandem with the industry’s growth.
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Post Holdings is a consumer-packaged goods holding company. It currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 52.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings suggests growth of 15.2% and 3.4%, respectively, from the year-ago reported numbers.
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The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 23.2% and 20.3%, respectively, from the year-ago reported numbers.
Celsius Holdings, the maker of the leading global fitness drink, CELSIUS, currently carries a Zacks Rank #2. Celsius Holdings has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 41.6% each from the year-ago reported numbers.
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