Introduction
Casey's General Stores, Inc. is a leading convenience store chain in the United States, operating approximately 2,900 stores across 20 states as of 2024. With a rich history dating back to 1959, Casey's has evolved into a retail powerhouse, offering a diverse array of products and services that cater to the needs of its customers.
History and Growth
The company's roots can be traced back to 1968 when the first Casey's General Store opened in Boone, Iowa. Initially starting as a single store operation focused on providing a convenient shopping experience for rural communities, Casey's has steadily expanded its footprint over the decades, strategically positioning its stores in smaller communities across the Midwest and beyond. This focused approach has allowed the company to establish a strong presence in markets where larger competitors have a limited presence, providing Casey's with a distinct competitive advantage.
Throughout its history, Casey's has faced various operational and competitive challenges, including managing fuel price volatility, adapting to changing consumer preferences, and responding to the rise of larger convenience store chains and big-box retailers. However, the company's commitment to its core values of customer service, community engagement, and operational excellence has allowed it to navigate these obstacles and maintain its position as a respected and successful convenience store operator.
A significant milestone in Casey's history was its decision to begin offering in-store food preparation and a broader selection of grocery items. This strategic move differentiated Casey's from traditional gas station convenience stores and allowed it to better meet the evolving needs of its customers. Over time, the prepared food and grocery categories grew to become a significant portion of the company's revenue and profitability.
In 1983, Casey's completed its initial public offering, raising capital to accelerate its growth and expansion plans. This access to public markets enabled the company to pursue strategic acquisitions and invest in infrastructure to support its growing network of stores.
Business Model
Today, Casey's operates a vertically integrated business model, with the company owning and operating its own distribution centers and manufacturing facilities for key in-store offerings, such as its popular pizza and bakery products. This level of control over the supply chain has enabled Casey's to maintain high-quality standards, ensure consistent product availability, and optimize costs, all of which contribute to the company's impressive financial performance.
Financials
In the fiscal year 2024, Casey's reported annual revenue of $14.86 billion, a testament to the company's ability to generate robust top-line growth. Net income for the same period stood at $501.97 million, while the company's operating cash flow reached $892.95 million. These strong financial metrics underscore Casey's operational efficiency and disciplined approach to capital allocation.
For the third quarter of fiscal 2025, Casey's reported total revenue of $3.90 billion, an increase of 17.3% year-over-year. This growth was primarily driven by $459.42 million of additional revenue from the Fikes acquisition, which included 198 additional convenience stores and a wholesale fuel network. Net income for the quarter was $87.10 million.
Casey's operations are organized into three main product segments: Prepared Food and Dispensed Beverage, Grocery and General Merchandise, and Fuel. In the third quarter of fiscal 2025, the Prepared Food and Dispensed Beverage segment generated revenue of $397.15 million, up 13.7% from the prior year period. The Grocery and General Merchandise segment reported revenue of $2.37 billion, up 15.9% year-over-year. The Fuel segment saw revenue of $3.90 billion, up 15.4% compared to the same period last year.
The company's business is seasonal, with higher sales and profitability typically occurring during the first and second fiscal quarters.
Liquidity
As of January 31, 2025, Casey's had a strong liquidity position with $394.81 thousand in cash and an $850 million Revolving Facility. The company also maintains a $50 million Bank Line of Credit, with $308 million in letters of credit outstanding. Casey's debt-to-equity ratio stood at 0, while its current ratio was 0.92 and quick ratio was -9.86.
Key Success Factors
A key driver of Casey's success has been its focus on offering a compelling in-store experience that combines convenience with a curated selection of high-quality products. The company's prepared food and dispensed beverage offerings, which include its renowned pizza and bakery items, have been particularly successful, accounting for a significant portion of the company's overall revenue and profitability.
Additionally, Casey's has placed a strong emphasis on customer engagement and loyalty, with the launch of its Caseys Rewards program. This initiative has not only fostered deeper connections with customers but has also provided valuable data and insights that have informed the company's merchandising and marketing strategies.
Growth Strategy
The company's growth strategy has been multi-faceted, with a focus on both organic expansion and strategic acquisitions. In November 2024, Casey's completed the acquisition of Fikes Wholesale, owner of CEFCO Convenience Stores, which added 198 stores primarily in Texas, Alabama, Florida, and Mississippi. This acquisition is expected to contribute over $200 million of inside sales and approximately 200 million gallons of fuel for the second half of fiscal 2025.
Casey's is also focusing on expanding its electric vehicle charging stations and renewable fuel offerings in response to evolving consumer demand. The company expects to add approximately 270 stores for the fiscal year 2025.
Despite the challenges posed by the COVID-19 pandemic, Casey's has demonstrated resilience and adaptability. The company has navigated the evolving market landscape by implementing robust safety protocols, enhancing its digital capabilities, and optimizing its operations to better serve customers during times of uncertainty.
Future Outlook
For the full fiscal year 2025, Casey's expects EBITDA to increase at least 10%. Total operating expenses are expected to increase between 11% to 13%, including approximately $25 million to $30 million in one-time deal and integration costs related to the Fikes acquisition. Same-store operating expenses excluding credit card fees are expected to increase approximately 2% for the year.
The company anticipates net interest expense of approximately $90 million, depreciation and amortization of approximately $410 million, and purchases of property, plant, and equipment of approximately $550 million for the fiscal year. The tax rate is expected to be approximately 23% to 25%.
Casey's projects inside same-store sales to increase between 3% to 5%, with inside margins expected to be comparable to the prior year. Same-store fuel gallons sold are expected to be between negative 1% to positive 1%.
Industry Trends
The convenience store industry is highly competitive, with Casey's competing on price as well as other traditional convenience store features like location, product offerings, and customer service. The industry is estimated to grow at a compound annual growth rate of 3-5% over the next 5 years, driven by growth in prepared food, dispensed beverage, and alternative fuel sales.
Conclusion
In conclusion, Casey's General Stores is a unique and differentiated player in the convenience store industry, with a storied history, a vertically integrated business model, and a relentless focus on serving its customers and communities. As the company continues to build upon its strong foundation and execute its growth strategy, it is well-positioned to maintain its leadership in the convenience store sector and deliver sustained value for its shareholders.