Casey’s General Stores Inc. achieved impressive results in the first quarter of fiscal 2024, with fuel margins reaching a historically high level of 41.6 cents per gallon (cts/gal). Despite this achievement, Chief Executive Officer Darren Rebelez noted that there were no significant events that influenced these margins during the relatively uneventful quarter. This robust performance indicates a positive trend in the industry, suggesting that higher fuel margins are here to stay.
During the quarter, Casey’s also experienced a 0.4% increase in same-store fuel gallons, demonstrating the company’s ability to strike a balance between volume and margins. This quarter marks the ninth consecutive quarter where fuel margins have remained above 34.5 cts/gal. Additionally, in four out of the last five quarters, margins have exceeded 40 cts/gal.
One contributing factor to the sustained high fuel margins is the pressure faced by smaller retailers without economies of scale. These retailers continue to grapple with increased operating costs, which ultimately benefits the industry by keeping fuel margins elevated.
Although retail fuel dollar sales saw a 24% year-to-year decline in Q1 due to lower pump prices, Casey’s managed to counterbalance this with a 3.6% increase in retail gallons sold, amounting to approximately 714 million gallons. The growth in retail gallons sold can be attributed primarily to an expansion in Casey’s store count, which reached 2,536 stores by the end of the first quarter.
Overall, Casey’s General Stores Inc. has demonstrated its ability to achieve record-breaking fuel margins and maintain consistent growth in same-store fuel gallons. The company’s performance in Q1 2024 highlights its strategic focus on delivering strong results while adapting to market conditions.
Total Fuel Gross Profit Decreases by 3.6% YoY
In the first quarter, the total fuel gross profit of Casey’s declined by 3.6% year over year, amounting to $297.0 million. This decrease was attributed to the company surpassing its record high fuel margins from the previous year.
Additionally, Casey’s experienced a rise in sales of renewable fuel credits, amounting to $20.2 million, which indicates an increase of $2.5 million from the same quarter in the previous year.
Growing Interest in E15 Driven by Rising Gasoline Prices
With the recent surge in retail gasoline prices, Casey’s officials observed a growing interest in E15, a type of gasoline that generally retails for a few cents less than E10 gasoline. This increased demand has primarily come from lower-income customers earning less than $50,000 per year, which accounts for approximately 25% of the retailer’s customer base. Notably, Casey’s witnessed a notable 15% increase in sales of the 15% ethanol gasoline blend compared to the previous year.
Updated Outlook for Fiscal Year 2024
Casey’s has recently revised its fiscal 2024 outlook due to the impending acquisition of new stores, expected to add a minimum of 150 locations to their portfolio. As a result, the company anticipates that same-store fuel gallons sold will range from -1% to 1%. Furthermore, Casey’s highlighted that its fuel margin for August has consistently operated within the high-30s percentile.
Strong Financial Performance for Q1
In the first quarter, Casey’s reported a net income of $169.2 million, reflecting an impressive growth rate of approximately 10.7% compared to the same period in the previous year. Furthermore, the company’s diluted earnings per share stood at $4.52, representing an 11% increase from the corresponding period a year ago.
