Casey's General Stores CEO Darren Rebelez sits down with Jim Cramer

Casey's General Stores: A Deep Dive with CEO Darren Rebelez

Key Concepts:

• Casey's General Stores (CASY): Midwestern convenience store chain known for its pizza.
• Same-store sales: A key metric reflecting revenue growth in existing stores.
• Private label/House brand: Products branded under Casey's name.
• Value proposition: The perceived benefit a customer receives for the price paid.
• White space: Untapped market opportunities for expansion.
• EBITDA Growth: Earnings Before Interest, Taxes, Depreciation, and Amortization growth.

1. Company Overview and Recent Performance:

• Casey's General Stores (CASY) has experienced significant stock growth, with a 75% gain since September 2023 and a 12% jump following a strong earnings report.
• The company reported a "monster earnings beat," exceeding expectations for the quarter.
• CEO Darren Rebelez emphasizes the company's focus on food, store growth, and operational efficiency.

2. Casey's Pizza: A Cult Following:

• Casey's is known for its pizza, which is made from scratch in every store.
• The dough is made fresh daily, using high-quality ingredients.
• The pizza's quality attracts customers across various income levels, with higher-income consumers appreciating the value proposition.
• Jim Cramer highlights his personal experience with Casey's pizza, emphasizing its quality and taste.

3. Sustained Growth and Business Strategy:

• Casey's has demonstrated consistent EBITDA growth over the past 1, 5 and 10 years, comparable to companies like Costco and Ollie's.
• The company's success is attributed to a simple and clear business plan:
  • Accelerate the food business.
  • Grow the number of units (stores).
  • Enhance operational efficiency.
• Rebelez emphasizes the importance of a simple, understandable plan for team execution.

4. Private Label Quality and Value:

• Casey's private label products are designed to be of higher quality than national brand equivalents.
• The company maintains a high standard for its private label offerings, ensuring they meet or exceed customer expectations.
• The reputation of Casey's prepared food and pizza contributes to the perceived quality of its private label products.

5. The Importance of Value in Today's Market:

• Consumers are increasingly focused on value due to recent economic challenges, including supply chain issues, inflation, and rising interest rates.
• Casey's focuses on providing quality products at a competitive value, attracting customers who are seeking the best bang for their buck.

6. Expansion Opportunities and Market Potential:

• Casey's sees significant "white space" for expansion, particularly in states like Texas.
• In Iowa, Casey's has 550 stores for a population of 3 million, while in Texas, it has 170 stores for a population of 30 million.
• The acquisition in Texas was successful, with a smooth integration of the acquired business and its employees.

7. Leadership and Vision:

• Jim Cramer praises Casey's leadership, clear vision, and the enthusiasm of its employees.
• He highlights the rarity of such a combination in American business.

8. Notable Quotes:

• Darren Rebelez: "We do make the best pizza in the country, Jim. And it's not an accident either."
• Darren Rebelez: "We focus on our food, we focus on store growth, we focus on running our business efficiently, all underpinned by our great team. And it's all in our control."
• Darren Rebelez: "They [private label products] have to be better than the national brand equivalent. And if we can't get it done, then we don't get it in the assortment."
• Jim Cramer: "You've got something special going on and you see it very rarely in American business. You've got people who are fired up. You got a clear vision, you got a lot of white space, you got good leadership."

9. Conclusion:

Casey's General Stores is presented as a well-managed company with a clear strategy for growth. Its focus on quality food, efficient operations, and strategic expansion positions it for continued success. The company's strong performance, dedicated team, and significant market opportunities make it an attractive investment. Despite the recent stock jump, the segment suggests it's not too late to invest in Casey's (CASY).