[caption id="attachment_96177" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption] 1Q20 Results Casey’s General Stores reported 1Q20 revenue of $2.63 billion, up 1.5% year over year and above the consensus estimate of $2.61 billion. The company reported diluted EPS of $2.31, up 21.6% year over year and beating the consensus estimate of $2.05. Management attributed the strong growth in diluted EPS to the company’s fuel price optimization initiative, store growth, and a continued focus on controlling operating expenses. Gross margin increased 138 basis points (bps) year over year to 21.5%, and the operating margin increased 80 bps year over year to 7.1%. Performance by Segment

• Fuel: Total gallons sold for the quarter climbed 2.9% to 619.1 million gallons, while gross profit increased 22.3% to $151.0 million. For the quarter, average fuel margin was 24.4 cents per gallon, while same-store gallons sold were down 2.0%. The company attributed growth in gross profit to advances in fuel price optimization and additional fuel margin captured.
• Grocery and other merchandise: 1Q20 revenue was up 6.7% YoY to $687.9 million. Same-store sales were up 3.2% YoY with an average margin of 31.3%. Gross profit was up 3% to $215.5 million. Management is encouraged by the momentum in this category and is optimistic about the current rollout of an in-store price optimization tool.
• Prepared food and fountain: 1Q20 revenue was up 5.3% year over year to $295.9 million while total gross profit grew 5.6% to $184.0 million. Same-store sales for the quarter were up 1.6% with an average margin of 62.2% in 1Q20, which management attributed to the company’s previously launched e-commerce website and new mobile app.

Outlook Management stated that development plans are underway for a third distribution center, which is scheduled to break ground in the southwest part of the company’s territory later this year. Upon completion, the company expects it to provide immediate cost savings and support the company’s future expansion strategy. For the full fiscal 2020, management provided guidance as follows:

• FY20 same-store sales growth for fuel to be between (0.5)% and 1.0% YoY.
• FY20 same-store sales for grocery and other merchandise to increase 2.5-4.0% YoY.
• FY20 same-store sales for prepared food and fountain to increase 3.0-6.0% YoY.
• To complete construction on 60 new stores by the end of FY20.

• To acquire 25 stores by the end of FY20.