0000726958-25-000114
SEC filingQ2 FY2026 net income rose 14% to $206M on 14.2% revenue growth, driven by fuel margin expansion and the Fikes acquisition, partially offset by higher costs.
For the second quarter of fiscal 2026 (ended October 31, 2025), Casey's reported total revenue of $4.506 billion, a 14.2% increase from $3.947 billion in the prior-year quarter. The growth was primarily driven by the acquisition of Fikes (198 stores), which contributed $511.8 million in incremental revenue. Net income rose 14.0% to $206.3 million from $180.9 million, yielding diluted EPS of $5.53 compared to $4.85. Gross profit (revenue less cost of goods sold excluding depreciation and amortization) increased 17.0% to $1.122 billion, with gross margin expanding 60 basis points to 24.9%. Operating income grew 18.4% to $298.7 million, with operating margin rising 24 bps to 6.63%. The improvement was driven by higher fuel margins and strong inside-store profitability, partially offset by a 16.7% increase in operating expenses (including 236 additional stores and higher labor rates) and a 96.7% jump in net interest expense due to debt issued for the Fikes acquisition.
Prepared food & dispensed beverage revenue rose 12.0% to $467.8 million, with same-store sales up 4.8% from whole pizzas and hot sandwiches. Segment margin declined 10 bps to 58.6% due to the lower-margin CEFCO stores from the Fikes acquisition. Grocery & general merchandise revenue increased 13.4% to $1.191 billion, same-store sales +2.7% driven by non-alcoholic beverages, and margin improved 40 bps to 36.0% on favorable product mix. Fuel revenue grew 11.3% to $2.687 billion, with gallons sold up 16.8% (including Fikes volumes) and average retail price down 4.8%. Fuel margin per gallon improved to 41.6 cents from 40.2 cents, supported by RIN sales of $7.2 million (7.0 million RINs), and the fuel margin rate expanded to 14.0% from 12.9%. Other revenue (wholesale fuel, car wash, lottery) surged 148.2% to $160.4 million, largely from the Fikes wholesale network and an $8.0 million one-time gift card breakage adjustment; its margin fell to 25.5% from 41.3% due to the lower-margin wholesale mix.
The MD&A does not provide quantitative guidance, but management expressed confidence that elevated fuel margins will persist, though subject to oil price volatility, macroeconomic conditions, and geopolitical risks. The company continues to expand its EV charging network (232 stations at 48 stores) and renewable fuel offerings. Store growth remains a priority, with 16 new builds and 26 acquisitions in the first half. Management expects cash flows from operations, plus available credit facilities ($49.7 million bank line and $850 million revolving facility), to fund working capital and growth initiatives. No material changes to critical accounting policies were noted.
As of October 31, 2025, Casey's held $492M cash and equivalents, up from $327M at April 30, 2025, driven by strong operating cash flow of $719M. Total debt (including finance leases) stood at $2.45B, a net decrease of $55M from $2.51B at fiscal year-end. The debt reduction reflects $60M in scheduled repayments. The current ratio remained healthy at 1.05x, with current assets of $1.19B covering current liabilities of $1.14B. Deferred revenue from the Casey's Rewards loyalty program was $68.7M, up from $64.1M at year-end, indicating growing guest engagement.
No material purchase commitments or contractual obligations were disclosed in the Notes. The only contingent liabilities relate to pending litigation (FLSA overtime claims), for which the company believes adequate provisions have been made and does not expect material impact. Unrecognized tax benefits totaled $12.4M, with $9.8M that would affect the effective tax rate if recognized.
Casey's operates a single reportable segment: convenience stores. Segment revenue of $9.07B for H1 FY2026 was generated from 2,921 stores across 19 Midwestern states. While operating expenses are not separable by product category, gross profit contributions by category (revenue less cost of goods sold) are: Fuel: $4.40B (rev $6.98B, COGS $4.67B, GP $2.31B); Grocery & General Merchandise: $0.59B (rev $2.14B, COGS $1.55B); Prepared Food & Dispensed Beverage: $0.42B (rev $0.81B, COGS $0.39B); Other (wholesale fuel): $0.04B (rev $0.28B, COGS $0.24B). Net income for the segment was $421.7M, a 16.8% increase over the prior year period.