Executive Summary

Q2 FY2025 delivered double‑digit profit growth despite lower retail fuel prices: Diluted EPS $4.85 (+14% YoY), Net Income $181M (+14%), EBITDA $349M (+14%), driven by robust inside gross profit (+12%) and disciplined OpEx control .
Inside same‑store sales rose 4.0% (two‑year stack +7.1%) with inside margin expanding 110 bps to 42.2%, led by Prepared Food & Dispensed Beverage (+5.2% SSS) and Grocery & General Merchandise margin mix gains (+160 bps) .
Guidance raised post‑Fikes close: FY2025 EBITDA growth at least 10% (prior 8%); OpEx growth 11–13% (prior 6–8%); net interest expense ≈$90M (prior $56M). Fikes expected modestly dilutive to EBITDA in Q3 (one‑time costs) and modestly accretive in Q4 .
Potential stock reaction catalysts: structural grocery margin mix shift and durable inside margin strength, balanced fuel strategy (>40¢/gal) vs regional volume declines, and clarity on Fikes integration timing and synergy phasing .

What Went Well and What Went Wrong

What Went Well

Inside gross profit grew 12% to $619.7M with inside margin up 110 bps to 42.2%; Prepared Food SSS +5.2% (hot sandwiches +~60%, cold dispensed beverages +~10%), and Grocery margin +160 bps on mix and asset protection .
Fuel execution balanced volume and margin: total gallons +6.2% (new units), fuel margin 40.2¢/gal; outperformed OPIS Mid‑Continent by ~500 bps in same‑store gallons, indicating share gains .
Operational efficiency: same‑store OpEx ex credit card fees +2.3% with same‑store labor hours down ~1% for the 10th straight quarter; strong liquidity of ~$1.25B at quarter end .

Quote: “Inside same‑store sales were driven by the prepared food and dispensed beverage category… Our fuel team continues to balance volume and margin… we reduced same‑store labor hours for the tenth consecutive quarter.” — Darren Rebelez, CEO .

What Went Wrong

Retail fuel price decline (−$0.51/gal YoY) pressured reported revenue (−2.9% YoY) and CPG (40.2¢ vs 42.3¢ YoY), with RINs down $3.5M YoY .
Cheese costs were a modest headwind to prepared food margins in Q2 (up ~6% YoY; ~$2.25/lb vs $2.12), partially offsetting category strength .
Higher operating expenses (+5% YoY) from running 93 additional stores; FY2025 OpEx outlook raised to 11–13% including $25–30M one‑time deal/integration costs for Fikes .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Total Revenue ($USD Billions)	$3.60	$4.10	$3.95
Net Income ($USD Millions)	$87.0	$180.2	$180.9
Diluted EPS ($)	$2.34	$4.83	$4.85
EBITDA ($USD Millions)	$219.0	$345.8	$348.9

YoY comparison (Q2 2025 vs Q2 2024):

Metric	Q2 2024	Q2 2025	YoY Change
Total Revenue ($USD Billions)	$4.06	$3.95	−2.9% (fuel price)
Net Income ($USD Millions)	$158.8	$180.9	+13.9%
Diluted EPS ($)	$4.24	$4.85	+14.4%
EBITDA ($USD Millions)	$305.9	$348.9	+14.1%

Segment breakdown (Q2 2025 vs Q2 2024):

Category	Revenue ($USD Millions) Q2 2024	Revenue ($USD Millions) Q2 2025	Gross Profit ($USD Millions) Q2 2024	Gross Profit ($USD Millions) Q2 2025	Margin (%) Q2 2024	Margin (%) Q2 2025
Prepared Food & Dispensed Beverage	$382.5	$417.8	$225.7	$245.5	59.0%	58.7%
Grocery & General Merchandise	$964.4	$1,049.7	$327.6	$374.2	34.0%	35.6%
Fuel	$2,646.5	$2,414.6	$308.8	$312.3	11.7%	12.9%
Other	$71.0	$64.6	$23.5	$26.7	33.0%	41.3%
Total	$4,064.4	$3,946.8	$885.6	$958.6	21.8%	24.3%

KPIs (store operations and fuel; oldest → newest):

KPI	Q4 2024	Q1 2025	Q2 2025
Inside Same‑Store Sales (%)	5.6%	2.3%	4.0%
Prepared Food & Dispensed Beverage SSS (%)	8.8%	4.4%	5.2%
Grocery & General Merchandise SSS (%)	4.3%	1.6%	3.6%
Inside Margin (%)	41.2%	41.7%	42.2%
Fuel Margin (¢/gal, ex cc fees)	36.5¢	40.7¢	40.2¢
Same‑Store Fuel Gallons (%)	+0.9%	+0.7%	−0.6%
Store Count (period end)	2,658	2,674	2,685
RINs Sold ($USD Millions)	$1.0	$4.8	$4.9
Same‑Store OpEx ex cc fees (%)	2.6%	0.7%	2.3%
Liquidity ($USD Billions)	~$1.1	~$1.2	~$1.25
Dividend per share ($)	$0.50	$0.50	$0.50
Share Repurchase ($USD Millions)	~$15 in Q4	$0	$0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EBITDA Growth (%)	FY2025	At least 8%	At least 10%	Raised
Total Operating Expenses (%)	FY2025	~6–8%	11–13% (incl. ~$25–$30M one‑time)	Raised
Same‑Store OpEx ex cc fees (%)	FY2025	N/A	~2%	New
Net Interest Expense ($USD Millions)	FY2025	~$56	~$90	Raised
Depreciation & Amortization ($USD Millions)	FY2025	~$390	~$410	Raised
Purchases of PP&E ($USD Millions)	FY2025	~$575	~$550	Lowered
Tax Rate (%)	FY2025	~24–26%	~23–25%	Lowered
Store Additions (units)	FY2025	≥100	~270 (maintained from Q1 update)	Raised vs Q4; Maintained in Q2
Inside SSS (%)	FY2025	3–5%	3–5% (no change)	Maintained
Inside Margin	FY2025	Comparable to FY2024	Comparable to FY2024	Maintained
Same‑Store Fuel Gallons (%)	FY2025	−1% to +1%	−1% to +1%	Maintained
Fikes One‑Time Costs ($USD Millions)	2H FY2025	N/A	~$15–$20 (primarily Q3)	New
Fikes EBITDA Contribution	2H FY2025	N/A	Modestly dilutive in Q3; modestly accretive in Q4	New
Interest Expense Increment vs original ($USD Millions)	2H FY2025	N/A	≈+$35 due to financing	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Prepared Food innovation	Thin crust launch; lunch sandwich platform drove strong growth; margin held despite commodity noise	Hot sandwiches +~60%; cold dispensed +~10%; cheese headwind modest	Continuing strength; minor cheese headwind
Grocery margin mix	Private label penetration and mix shifts (imports/super premium alcohol) lifted margins; +140 bps Q4	+160 bps YoY on mix and asset protection; structural mix shift noted	Structural improvement
Fuel strategy	“Fuel 3.0” upstream steps begun; consistent pricing and share gains; CPG low‑40s	40.2¢ CPG; share gains vs OPIS; November CPG mid‑ to high‑30s seasonality	Balanced volume/margin; seasonal normalization
Consumer health	Higher‑income resilient; lower‑income trade to value (e.g., fountain drinks)	Consumer “hanging in”; lower‑income modest basket pressure; traffic positive	Stable with value focus
Operational efficiency	9th straight quarter of lower labor hours; digital production planner; AVA	10th straight quarter; same‑store hours −1%; ongoing CI initiatives	Durable efficiency
Fikes acquisition	Announced $89M pro forma EBITDA; leverage to ~2.4x at close; remodel CapEx ~$145–$150M	Closed Nov 1; modestly dilutive in Q3 (one‑time costs), accretive in Q4; leverage 2.3x; delever to ~2x in 12 months	Integration underway; synergy phasing clarified

Management Commentary

“Inside same‑store sales were up 4%… with an average margin of 42.2%. Hot Sandwiches continued their strong performance, up over 60% and cold Dispensed Beverages… up nearly 10%.” — Darren Rebelez (CEO) .
“Grocery and General Merchandise margin was 35.6%, an increase of 160 basis points… due to favorable mix and good asset protection performance.” — Stephen Bramlage (CFO) .
“EBITDA contribution from Fikes is expected to be modestly dilutive in the third quarter… modestly accretive in the fourth quarter.” — Stephen Bramlage (CFO) .
“We still plan to delever to 2x within the first year of closing… We likely will not repurchase shares until we achieve the targeted leverage ratio.” — Stephen Bramlage (CFO) .

Q&A Highlights

Grocery margin structural drivers: shift away from low‑margin cigarettes to nicotine alternatives; alcohol mix into imports/super premiums; shrink reduction via tech — supports +160 bps margin expansion .
Fikes seasonality and synergy timing: some seasonality; quick fuel pricing/procurement synergies; SG&A/procurement later; store remodel synergies over 3–4 years .
Fuel margins outlook: company does not guide CPG; Fikes geography mix a ~1¢ headwind; QTD mid‑ to high‑30s due to seasonality .
Inside sales trajectory: November inside SSS ~4% (midpoint of annual range); traffic positive; maintained 3–5% FY range .
Energy drinks momentum: category +~13% YoY led by Ghost/C4; execution aided by self‑distribution of Monster .

Estimates Context

Wall Street consensus (S&P Global) for Q2 FY2025 EPS and revenue was unavailable at the time of this analysis due to a data access limit (SPGI request limit exceeded). We attempted to retrieve consensus for Q4 2024, Q1 2025, and Q2 2025, but could not obtain values.
Near‑term estimate revisions should reflect: higher FY2025 net interest expense (~$90M vs prior ~$56M), elevated OpEx (11–13% with ~$25–$30M one‑time integration costs), and Fikes’ EBITDA dilution in Q3 followed by modest accretion in Q4; inside margins and grocery mix remain constructive .

Key Takeaways for Investors

Inside margin durability appears structural, powered by mix (alcohol, nicotine alternatives) and asset protection; expect continued margin resilience even amid commodity noise (cheese) .
Fuel strategy remains a competitive advantage: consistent pricing, share gains vs regional declines, and upstream “Fuel 3.0” capabilities enhanced by Fikes’ terminal and expertise .
Near‑term headwinds are manageable: Q3 dilution from one‑time Fikes costs and seasonally lower fuel margins; Q4 accretion expected; deleveraging to ~2x targeted within 12 months .
Cash returns paused near term: no repurchases planned until leverage target achieved; dividend maintained at $0.50 per quarter .
Growth runway intact: ~270 store additions in FY2025, integration/remodel cycle sets up multi‑year synergy realization in prepared food, SG&A, and procurement .
Trading setup: narrative favors names with defensible inside economics and balanced fuel strategies; monitor cheese and fuel margin seasonality through Q3, and Fikes integration milestones .
Watch estimate models for higher interest expense and OpEx; inside margin assumptions likely conservative given structural mix trends .

CASEYS GENERAL STORES INC (CASY)·Q2 2025 Earnings Summary