What Drove Casey’s Q1 2019 Top Line?

Casey’s 1Q 2019 topline

As discussed, Casey’s General Stores (CASY) reported better-than-expected results on both the top and bottom lines. The company’s grocery and merchandise, and prepared food and fountain categories, in particular, delivered solid results. Let’s dig deeper into the company’s key revenue drivers for the quarter.

What Drove Casey’s Q1 2019 Top Line?

Fuel margin stands strong despite weak comps

Gasoline, which accounts for more than 60% of Casey’s total sales, recorded a 6.5% YoY jump in gallons sold to 601.8 million gallons. Same-store gallons increased by 0.5%, below the company’s annual target range of 1.5% to 3%. However, its average fuel margin of 20.5 cents per gallon was around the upper end of the 18.5 to 20.5 cents a gallon goal.

“While same-store gallon movement was under our annual guidance range, we continued to outpace our peers in same-store gallons, and overall we are very pleased with the gross profit dollar growth,” said Terry Handley, president and CEO of Casey’s.

Grocery and merchandise comps exceed the target

Grocery and merchandise, Casey’s second-largest revenue segment, grew 7.9% YoY during the quarter to $645 million. This was the segment’s strongest growth over the past eight quarters. Same-store sales increased 3.2% as compared to a decline of 0.4% in the previous quarter. The company also exceeded the annual target of 1.5% to 3% growth. The average margin for the segment stood at 32.4%, which met the annual goal.

Prepared food and fountain meets yearly goals

Prepared food and fountain sales increased 7.9% YoY to $281 million. Same-store sales rose 1.7% versus a 1.7% decline in the previous quarter and were within the company’s annual target. The average margin stood at 62%, meeting the 60% to 62% margin guidance.

“Our prepared food category showed significant improvement from fourth quarter and moderate growth overall, including particularly strong results in the breakfast daypart,” said Handley.

“These results helped offset some softness in our bakery category. Overall, our increased investment in pizza promotions did not significantly affect our margin,” he added.